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Deferred Profit Sharing Plans (DPSP) by xzd16972


									   Deferred Profi t Sh aring                                                               Western Retail
   Plans (D PSP)                                                                           Lumber Association

                                                A formal at-work program offering
                                               employees the opportunity to save for
                                                retirement is the most cost-efficient
                                                                                        Defer re d Prof it Sha rin g
                                                   method of saying Thank You.
                                                                                             Plan s ( DPSP)

There are numerous Retirement Plan
options available to organizations.
The “vehicle” to provide the retirement                   Shayne Smith
                                                      Financial Security Advisor
programs is legislated by different          
governments. The common Group
Retirement vehicles are:                               Freedom 55 Financial
                                                       124 Nature Park Way
. Group RRSP
                                                    Winnipeg, Manitoba R3Y 1Y4
. DPSP                                                 Phone:     (204) 489-1022
. Registered Pension Plan (RPP)                        Toll Free: (877) 489-1022
                                                       Fax:       (204) 415-6262
All three are set up as defined contribution
programs where the contributions going
into the plan are defined and the benefit at
retirement is determined by: Time & Rate
of Return.
Plan Design of a Retirement program can
be customized to suit the corporate                 Glenn Kehrer, CEBS, CFP                Information provided by
philosophy of the company and the budget.                                                       Shayne Smith
Without an employer offering a Group             Group Benefits Consulting of Canada         Freedom 55 Financial
Savings Plan, many employees will delay            Suite 1103 -220 Portage Avenue           Phone: (877) 489-1022
                                                   Winnipeg, Manitoba R3C 0A5
investing for the future in favour of
managing short-term financial obligations.              Phone:     (204) 777-7789
                                                        Toll Free: (877) 777-8678
                                                        Fax:       (204) 777-7329
    People Love Profit

                                             A year-end bonus is nice to                    . Easily placed into a Monthly/Biweekly
                                             receive but:                                     budget.
                                             . Is spent within a few months.                . A huge assistance or start to an
                                             . Rarely are these bonuses placed in a           employee’s future savings program.
                                               retirement vehicle.                          Deferred Profit Sharing Plans are usually
                                             . Is cashed right away.                        tied to an employee’s contribution to their
                                             . Has no two year vesting protection for       own RRSP.
                                               the employer.
For the most part employees:                                                                An employee contributing $100 per month
                                             . Is expensive for an Employer to provide      will have $100 matched. This 100% rate of
. Are proud of their jobs and of the place     and sets a tone that each year a bonus       return is a very positive retention tool and
  that they work at. Otherwise they would      will be given.                               very attractive for new hires.
  seek new employment opportunities.         . Each year you have to communicate            The level of contribution can really make a
. Love to be recognized for a good job and     Why so Much or why so Little?                difference for an employee. Contributions
  their contribution to the success of an                                                   start at 1% and can go up to the CRA
  organization.                              A Deferred Profit Sharing Plan                 maximum.
. Are not saving enough money for their      contribution is:
                                             . Not cashable until retirement, termination   By setting up a plan where the employer
  retirement. People are living pay cheque
                                               or death of the member.                      matches employee contributions, everyone
  to pay cheque.
                                                                                            wins, and the perception of the employer
                                             . Not vested to the employee until after
A 4% contribution into a retirement plan                                                    investing in their people is intensified.
                                               two years of plan membership
from corporate profits is more exciting          (a refundable raise effect)                To impact an employee’s retirement value,
than receiving a $.57 per hour raise. Yet                                                   a minimum 4% employer contribution
both equal the same cost for an employer.    . Very attractive for an employee, as they
                                                                                            matched by the employee is recommended.
                                               are now receiving some of the “Profit”
(Based on a salary of $30,000). Once a
                                               that they work so hard to produce.
pay raise has been given the base for all
benefits has increased.                      . Not subject to the annual opening up of
                                               the corporate books to prove or disprove
Government agencies make a lot of money                                                         People love Profit. We all work
                                               the level of profitability.
on pay increases through the added CPP,                                                         hard to enrich our lives and those
E.I. & WCB charges.                                                                             of our families. By implementing
 A $1.00 pay increase reflects;                                                                 a tax effective Group Retirement
                                                                                                Saving Plan, you are providing
  $1.10 to the employer (E.I, CPP, WCB)
                                                                                                employees with the tools and
  $0.65 received to the employee after                                                         support required to build the
    E.I, CPP and taxes are calculated.                                                          future they imagine.
  Therefore the Government earns 40%
    more on every dollar of pay increase.

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