Deferred Profit Sharing Plan

A Deferred Profit Sharing Plan (DPSP) was designed to create a sense of partnership between the employer and employees. It is a registered trust with Canada Revenue Agency (CRA) and must comply with the terms and provisions of the Income Tax Act.

Who is eligible?

  • Eligibility into a DPSP is at the discretion of the employer, Plans such as these are commonly provided to a selected group of employees (e.g. Sales staff).
  • Significant shareholders and their families are not eligible to participate in a DPSP.

What are typical contributions to a DPSP? Are there contribution limits?

  • Contributions into a DPSP are usually 100% employer.
  • Although there is no minimum contribution limit, maximum contributions are to the lesser amount of the 18% of the plan member’s current year compensation or 50% of the Money Purchase Limit ($12,685 for 2015).

Who is responsible for the investments?

  • The plan sponsor provides the fund line-up for the plan member to choose.

Are there any withdrawal restrictions?

  • Any withdrawals are to the discretion of the plan sponsor. If permitted, plan members can make partial withdrawals that are taxed as income.

Call us today for more information and learn how a Deferred Profit Sharing Plan can be implemented into your company.

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