Professional Advice: This document was prepared solely as a general guide and is not intended to provide or replace professional, legal or tax advice. For your own specific situation, please consult your own tax and legal advisors.
Company Savings and Investment Plans
What is a EPSP, RRSP and TFSA?
Company Group Savings and Investment Plan
An example of a Company contributing in to a employees group savings plan as follows;
Once an employee reaches the minimum contribution limit set by the Company has been reached, then the Company will make their contribution to either a RRSP or a EPSP. The company's contribution is not allowed to go to your TFSA, as this account can only have individual contributions. This is a great benefit that maybe available to employees through a Company's Group Savings Plan.
Employee Profit Sharing Plan: (EPSP)
This is a non-registered account with in the Group Plan. Subject to taxes for any growth income, dividends or capital gains.
Register Retirement Savings Plan: (RRSP)
This is a Government Savings Plan, where the money you make in your RRSP investments is not taxed as long as it stays in the RRSP plan. Once you starting receiving an income from this plan, it will be counted as an income and you will be taxed. This is know as a "Taxed-Deferred Plan" You can convert your RRSP holdings to a Registered Retirement Income Fund (RRIF) (to receive an income) at any time, usually earliest is age 55. However, an RRSP must be converted to a RRIF by the end of the calendar year that you turn age 71. As you make contributions into your RRSP, you will receive a tax benefit for that year’s income tax, you can contribute up to 18% of your gross income. Early withdrawals from the RRSP Plan, will be subject to a withholding tax penalty. The tax penalty is as follows, if you take up to $5,000, they institution will hold back 10% of the withdrawal amount, If you take between $5,000 and $15,000, they hold back 20% and if it's more than $15,000, they hold back 30% in Ontario
Tax Free Savings Account: (TFSA)
This is a Government Savings Plan which is a flexible investment account that can help you meet both your short- and long-term goals. Investment income in a TFSA—whether you're earning interest, dividends or capital gains—are not taxed, even when withdrawn. You can also carry forward any unused contribution room from previous years. The current TFSA limited for all years previous and including 2019
is $63,500 a person over the age of 18.