Group RRSP: A group Registered Retirement Savings Plan (RRSP) is an employer-sponsored retirement savings plan, similar to an individual RRSP, but administered on a group basis by the employer. Contributions are made by pay-roll deduction, on a pre-tax basis, through a Group RRSP administrator. Employee contributions are often matched by the employer (typically to a maximum of 3-5% of earnings). However, contributions by the employer are not mandatory. Contributions by the employer are taxable as income to the employee.
Group TFSA: Whether an employer sponsors a Group TFSA with some level of matching contribution or not, the fact that this registered savings vehicle is available to employees provides an excellent opportunity for employers to engage their employees on the subject of savings and personal financial wellness.
A Group Tax-Free Savings Account allows individuals to accumulate after-tax money without paying tax on income earned within the account. Unlike an RRSP, contributions to a TFSA are not deductible for income tax purposes. A Group TFSA offers members the flexibility to withdraw money from the account whenever they want, for whatever they want, without paying taxes on the withdrawn amount. Members can contribute up to $5,000 annually and the unused contribution room can be carried forward to the following years’ contribution limit, plus any amount withdrawn in previous years.