Key points
- A group RRSP is your own RRSP, held under your employer's group arrangement. Leaving the job doesn't change that.
- A direct transfer between institutions on Form T2033 is not taxed and doesn't touch your contribution room.
- A cash withdrawal has 10%, 20% or 30% withheld (outside Quebec), is added in full to your income, and the room is not restored.
- Money from a pension plan is usually locked in; money from a DPSP may depend on vesting.
- Read the administrator's letter for the deadline: if you do nothing, the plan may decide for you.
What a group RRSP is
A group RRSP is a set of individual RRSPs that an employer arranges with one financial institution for its staff. Contributions usually come off your pay, and many employers add a matching contribution. Each account belongs to the employee: your contributions earn you a deduction, and your employer's contributions are a taxable benefit on your T4, which you can then deduct as an RRSP contribution.
Employers sometimes offer something that looks similar but follows different rules, so check which one you have:
| Plan | Who pays in | When you leave, generally |
|---|---|---|
| Group RRSP | You, and often your employer | Yours in full. Transfer, leave it if the plan allows, or withdraw (taxable). |
| Deferred profit sharing plan (DPSP) | Your employer only (2026 limit $17,695 a year) | The vested part can usually be paid out or transferred to your RRSP; unvested employer money may stay with the plan. |
| Defined contribution pension plan | Your employer, and often you | Usually locked in under pension law: moves to a locked-in retirement account or another pension, not cash. |
| Defined benefit pension plan | Your employer, and often you | A deferred pension or a commuted value; complex enough to get advice before choosing. |
Your three choices
1. Transfer it directly to your own RRSP
You open an RRSP (or use one you have) at the institution of your choice, and that institution asks the group plan to send the money across. The two institutions record it on Form T2033, "Direct transfer". Because the money never passes through your hands, nothing is withheld, nothing is added to your income, no T4RSP slip is issued, and your contribution room is unchanged. The money keeps growing tax-deferred in the new account.
A direct transfer can also go to a RRIF if you are retiring, or into your new employer's group plan if it accepts transfers.
2. Leave it where it is
Some group plans let former employees keep their account, sometimes with fewer investment choices or different fees. Others require you to move it within a set time after you leave, and may transfer it to an individual account at the same institution if you don't respond. Leaving it is fine if the plan allows it and suits you; just make sure you still get the statements and the beneficiary is current.
3. Cash it out
You can withdraw some or all of a group RRSP, unless it is locked in. It is the most expensive choice:
- Withholding up front. The institution withholds tax at the rates below and sends it to the CRA.
- Full income inclusion. The whole withdrawal is added to your income for the year, on a T4RSP slip. If the withholding is less than the tax at your marginal rate, you pay the difference when you file.
- Lost room. The contribution room you used is gone. Putting the money back later uses new room.
- Benefits and credits. A higher income for the year can reduce income-tested benefits such as the Canada child benefit or the GST/HST credit.
Withholding rates on withdrawals
| Amount withdrawn at one time | Withheld (outside Quebec) | Withheld in Quebec |
|---|---|---|
| Up to $5,000 | 10% | 5%, plus Quebec provincial tax |
| Over $5,000 up to $15,000 | 20% | 10%, plus Quebec provincial tax |
| Over $15,000 | 30% | 15%, plus Quebec provincial tax |
Non-residents of Canada generally have 25% withheld, unless a tax treaty reduces it. The withholding is a prepayment, not the final tax.
Round numbers, for illustration only. Someone in BC leaves a job in the spring with $40,000 in a group RRSP and an expected income of $70,000 for the year. Cashing it all out, the plan withholds 30%, $12,000, and pays $28,000. The full $40,000 goes on their return, raising income to $110,000, and part of it is taxed at a higher marginal rate than 30%, so they may owe more in April. The $40,000 of room is gone. Transferring it directly instead: $40,000 arrives in their own RRSP, nothing is withheld and nothing is added to income. The income tax calculator shows what a withdrawal would do to your own return.
Your employer's contributions and vesting
The CRA treats an employer's contributions to your group RRSP, and any administration fees it pays for you, as a taxable benefit reported on your T4. Your own contributions taken off your pay are not a benefit; they are your contributions. Employer contributions are generally subject to CPP and EI, unless the plan doesn't let employees withdraw them before they retire or leave (other than for the Home Buyers' Plan or Lifelong Learning Plan), in which case they are not insurable for EI. Your employer doesn't have to withhold income tax on them if you can deduct the contribution for the year.
Because the benefit was already taxed to you, money in a group RRSP is yours when you leave. Vesting periods, where leaving early means losing the employer's share, belong to DPSPs and pension plans. If your employer's money goes into one of those, check the plan booklet before you choose your last day.
Locked-in money from a pension plan
If part of your workplace savings sits in a registered pension plan, such as a defined contribution pension, the pension rules usually lock it in. When you leave, it can typically move only to another pension plan, a locked-in retirement account or a life annuity, and it can't be cashed out until you reach the plan's retirement age. Pension laws allow limited exceptions, such as small balances, shortened life expectancy or becoming a non-resident, and the rules depend on which law governs the plan (BC, Alberta or federal). The plan administrator will tell you which apply.
In British Columbia and Alberta, the locked-in account is usually a locked-in retirement account (LIRA), which holds the money until retirement, and later a life income fund (LIF), which pays it out as retirement income within yearly limits. In BC they are governed by the Pension Benefits Standards Act (BCFSA: LIRAs and LIFs). In Alberta they are governed by the Employment Pension Plans Act, which sets five ways to unlock money from a LIRA or LIF, including 50% unlocking (Government of Alberta: pensions information for individuals). Federally regulated plans have their own versions.
Other things to check
- Home Buyers' Plan and Lifelong Learning Plan. Money transferred to your own RRSP can still be used for the Home Buyers' Plan (up to $60,000) or the Lifelong Learning Plan ($10,000 a year, $20,000 in total), within those plans' rules. If you already have an outstanding HBP or LLP balance, your repayments continue whatever happens to the group plan. Locked-in money can't be used.
- Spousal plans. If part of the group plan is a spousal RRSP, transfer it to a spousal RRSP so it keeps that status. Withdrawals from a spousal RRSP soon after contributions can be taxed to the contributing spouse.
- Your contribution room next year. A new employer's pension plan reduces your RRSP room through the pension adjustment. Your room is on your notice of assessment and in your CRA account.
- Beneficiary. Name a beneficiary on the new account; a designation on the old group plan doesn't carry over.
- Fees and investments. Group plans often have lower fees than individual accounts. Compare before you move; a licensed advisor can explain the investment side.
Step by step
- Read the plan administrator's letter: what you have (group RRSP, DPSP, pension), what is vested, the choices and the deadline.
- Decide where the money goes. For a regular RRSP transfer, open an RRSP in your name; for locked-in money, a locked-in account.
- Ask the receiving institution to start the transfer. It prepares Form T2033 (or the locked-in equivalent) and sends it to the group plan.
- Check that the full amount arrives and that no tax was withheld. A transfer usually takes a few weeks.
- Keep the statements for your records and your next tax return.
How Finvo helps
We cover the tax side of changing jobs: reporting any withdrawal and the tax withheld, the RRSP benefit on your T4 and your deduction, your contribution room and any Home Buyers' Plan or Lifelong Learning Plan repayments, all on your return through our tax services or a personal membership. If you're thinking of taking money out, we can show you what it would cost in tax before you do. The RRSP tax savings calculator shows what a contribution is worth to you.
Finvo does not sell investments or hold accounts. The transfer is done by the two institutions, and a licensed advisor explains investment choices.
This guide is general information for employees in BC and Alberta, checked against the CRA's pages on 30 Oct 2026. Pension and plan rules vary; it isn't tax or investment advice for your situation.