Key points
- Contributions come straight from pay, so employees get the tax effect with each paycheque rather than at tax time.
- Employer contributions are a taxable benefit, but there is no income tax withholding when the employee can deduct them.
- Unless employees can't withdraw before retiring or leaving, employer contributions are pensionable and insurable (CPP and EI apply).
- A DPSP (limit $17,695 for 2026) is often paired with a group RRSP; its employer contributions aren't a taxable benefit when made.
- Group RRSP contributions use the employee's own RRSP room ($33,810 maximum for 2026).
How a group RRSP works
The employer chooses a provider, often a life insurance company, which sets up an RRSP for each employee who joins. Employees choose how much to contribute through payroll, and the employer may match part of it. Each employee owns their account and chooses investments from the plan's list.
- Employee contributions by payroll deduction reduce the income tax withheld, because the employer can take the RRSP deduction into account at source.
- Employer contributions to a group RRSP are a taxable benefit to the employee, but no income tax needs to be withheld when the employee can deduct the contribution. Unless the plan stops withdrawals before retirement or leaving, CPP and EI apply to them.
- A DPSP (deferred profit sharing plan) is a separate employer-funded plan; contributions aren't a taxable benefit when made and are taxed on withdrawal. They reduce the employee's RRSP room the next year through the pension adjustment.
When an employee leaves
The money in a group RRSP belongs to the employee. On leaving, they can usually move it to their own RRSP by direct transfer (CRA Form T2033), which avoids withholding tax, or keep it with the provider. Cashing it out is taxable, with tax withheld at 10%, 20% or 30% by amount. Our guide to moving a group RRSP goes through the choices.
Where Finvo fits
We set up group RRSP and DPSP contributions on payroll, report the taxable benefit and the pension adjustment on T4s, and make sure CPP and EI are applied as the plan requires. See payroll.
Finvo itself does not sell insurance or give insurance advice. Finvo can connect you with a licensed insurance agent from our partner network who can help with insurance advice if you need it. The licensed agent advises on products and coverage; Finvo covers the tax side. Insurance and other specialists are joining Finvo as contractors, so a group of consultants can work on your file together and you don't have to go from place to place.
Whoever you deal with, you can check that an agent is licensed: in British Columbia with the Insurance Council of BC licensee directory, and in Alberta with the Alberta Insurance Council agent lookup.
This page is general information, checked against the sources below on 5 Nov 2026. Every policy and plan has its own terms; it isn't insurance, tax, investment or legal advice for your situation.