A Group RRSP is a collection of individual RRSPs where an employer assists employees by handling their contributions through regular payroll deductions on a pre-tax basis.
Employees’ contributions are deducted from their taxable income, reducing the income tax they pay. Income earned within an RRSP, which may include interest, dividends, and capital gains, is not taxed until the money is withdrawn.
Under current legislation, contributions up to 18% of the employee’s previous year’s earned income to the maximum contribution limit can be made, if the employee is not a member of a Deferred Profit Sharing Plan (DPSP) or a registered pension plan. If the employee is a member of a DPSP or a pension plan, the total maximum RRSP will be reduced by a pension adjustment. Just ask Gateway.