Whether you're an entrepreneur or an employee, saving for retirement is one of the biggest financial commitments you’ll ever make. Deciding what's right for you and choosing among the many options can be daunting. We help business owners and their staff reach their retirement goals with confidence using a variety of solutions, including pension plans, group retirement savings plans, individual investment accounts, seminars and workshops.
Avoiding the tax bite along the way:
We work with companies and their employees to ensure their hard-earned dollars don't go to waste paying too much tax. For example, we recently learned of a firm that was making needless EI, CPP and WSIB remittances because of the type of retirement plan being used. We recommended an alternative arrangement that saved them thousands by reducing their required payroll taxes, an option their existing advisor wasn’t aware of.
Group RRSPs offer employees a convenient and effective way to save for retirement because they contribute to their retirement plan through payroll deductions. Under this kind of arrangement, Group RRSP providers can use workplace seminars to educate employees about the importance of RRSPs.
Unlike other employee benefits, a retirement plan is perhaps the only benefit that in its most basic form can be offered to employees at no cost to the employer.
Defined benefit (DB) and defined contribution (DC) plans are the two main kinds of registered pension plans offered to employees.
Defined benefit plans
DB plans pay out a guaranteed amount at retirement based on the employee’s earnings and years of service. Companies, or sponsors, choose whether or not employees are required to contribute. DB plans can vary, but typically the amount the employee receives is the average of three to five of his or her highest earning years. The sponsor’s contributions and administrative expenses are tax–deductible.
Defined contribution plans
In a DC plan, the amount the employer and employees contribute to the plan is known, but the amount of retirement income that will be paid out is not.
Sponsors have more flexibility because contributions and plan expenses are tax-deductible, and contributions are exempt from payroll taxes. Plan members can choose how they want to invest their contributions.
Deferred profit sharing plans (DPSPs) are flexible savings arrangements that allow an employer to distribute a portion of its pre-tax profits to employees as a tax-sheltered investment.
Under DPSPs, companies only make contributions during profitable years, and the contributions and administrative expenses are tax-deductible.