Deferred profit sharing plan for employees
Let your employer help you save for the future
A deferred profit sharing plan enables you to share in the company’s success – no contribution required
Your company makes contributions to your account from the year’s profits.
You don’t pay tax on any earnings until you withdraw this money.
Complements other retirement savings
Your employer will often offer a DPSP alongside a group RRSP or other savings plans.
What is a DPSP?
A DPSP is a way for your employer to help you save for the future.
They do this by taking part of the company profits and distributing those funds into designated account for eligible employees. Only your employer can contribute to your DPSP, but you may be able to choose how that money might be invested.
Because a company’s profits may vary over the years, the amount your employer contributes to your DPSP can change and is at their discretion.
Are your employer’s contributions to your DPSP a taxable benefit?
You will not be taxed on this money until you withdraw it. It’s important to remember that the money contributed to your DPSP will affect your RRSP contribution limit the next year, so be aware of that.
Can I withdraw money from a DPSP?
The money in your DPSP may not be “vested” until a certain amount of time has passed – sometimes a year or more – meaning that if you leave your employer before then, you forfeit the money.
If it’s vested or that time has passed, and you leave your employer, you can transfer your DPSP funds into another registered plan, like an RRSP, without paying tax on it. There are circumstances where your employer will allow you to withdraw or transfer some or all of the vested portion prior to leaving their employer.