DPSP & EPSP Questions

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.

Postby brucecohen » 23 Feb 2009 15:43

Serdic wrote:Given my DPSP has a two year vesting period; if I were to leave before that two years was up, would the pension adjustment still be made and thus reduce my contribution room?

You would get a "pension adjustment reversal" or PAR that does just what the name implies: increase your own RRSP room by the amount by which it was previously reduced to accommodate the employer contribution that has now been lost. Your employer is responsible for reporting the PAR to you and Canada Revenue.

If you get a severance payment that is not covered by the RRSP retiring allowance rollover for pre-1996 service, you could use the PAR to tax-shelter part of it in your RRSP.
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Postby Serdic » 23 Feb 2009 15:45

Thanks, Bruce.
End Transmission.
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DPSP vs EPSP - need help

Postby brampton1 » 30 Mar 2009 19:35

My employer offers a share ownership plan where they match employee contributions. There are 2 options...

1) Employee contributions go into an ESP (employee savings plan) and employer contributions go into an EPSP (employee profit sharing plan)

2) Registered option, where employee contributions go into an RRSP and the employer contributions go into a DPSP

I'm fortunate to be able to max out my RRSP contributions each year outside of these plans, so I would prefer to use option #1, as the DPSP eats away RRSP contribution room. My question is... are there any benefits to a DPSP that I should be aware of vs. an RRSP that would make option #2 the preferred option.

Any help here would be greatly appreciated.
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Postby Alpha Dog » 30 Mar 2009 20:09

The benefits to a DPSP are for the employer, not the employee (the contributions to a DPSP don't attract payroll tax). Its really a choice of registered vs. non-registered, and if you're maxing your RRSP contributions, then its personal preference.

My group plan is structured similarly, and I chose the DPSP/RRSP plan, simply due to the fact my employer punishes plan withdrawals with a match suspension (and you never know when you'll need the non-reg. money). If your employer is more enlightenend, it really is up to you.
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Postby couponstrip » 30 Mar 2009 20:29

The benefits to a DPSP are for the employer, not the employee (the contributions to a DPSP don't attract payroll tax).


Isn't this also the case for employer contributions to an EPSP?
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Postby Alpha Dog » 31 Mar 2009 20:18

My apologies, I should have been more clear.

The question later on was "are there benefits to a DPSP that I should be aware of vs. an RRSP", and my comments were that the reason the DPSP is used over straight RRSP employer match are employer-centric.

EPSP's also don't attract payroll tax, but this is largely moot from the employee perspective.
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Re: DPSP & EPSP Questions

Postby mikem27 » 17 Jan 2010 15:11

I retired in 2008 with a DPSP with my company. The funds are invested in company stock. Is there a need to convert this to an RRSP now or can I wait until I am closer to age 71. I am currently 62.
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Re: DPSP & EPSP Questions

Postby brucecohen » 17 Jan 2010 20:05

mikem27 wrote:I retired in 2008 with a DPSP with my company. The funds are invested in company stock. Is there a need to convert this to an RRSP now or can I wait until I am closer to age 71. I am currently 62.

You don't have to convert it now, but rolling to an RRSP would give you more investment choice and you could eliminate/reduce the risk of decline in the company's share price.
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