2 big questions about VRSPs


You don't have to contribute to your employees' plan, but you can. Any voluntary contributions you choose to make will be tax-deductible for the company.

Adèle Manseau | Desjardins Group

Whenever a new product comes on the market, two questions quickly follow: how much does it cost and how does it work?

Even though the VRSP has been around since 2014, that’s still the reaction of a lot employers—especially with just a few months left until the deadline!

How much does it cost?

For employers

  • There are no setup or maintenance costs. However, if you decide to change plan administrators (i.e., transfer your plan from one financial institution to another) you may be charged transfer fees.1
  • You don’t have to contribute to your employees’ plan, but you can. Any voluntary contributions you choose to make will be tax-deductible for the company.

For employees

  • As with any plan, there are investment fees.1 However, there is a government-imposed maximum, which makes the VRSP an attractive savings vehicle for employees.
  • You’ll also be charged fees if you withdraw any money, transfer your plan to another financial institution, or request certain administrative services.1

How does it work?

That’s the million-dollar question! Here’s an overview:

If you’re an employer

1. Choose a plan

First, you have to choose a VRSP from one of the administrators registered with Retraite Québec. You may be able to enrol online, depending on the administrator you choose.

2. Give notice

Under the Voluntary Retirement Savings Plan Act, employers are required to give their employees 30 days’ notice that they will be setting up a VRSP.

3. Enrol your employees

The Act also requires employers to automatically enrol their eligible employees in the plan, as well as any employee who asks to enrol. Your plan administrator will give you instructions for how to do this.

4. Manage your plan

Once the plan is all set up, managing it involves:

  • Collecting employee contributions via payroll deductions
  • Remitting contributions to the plan administrator
  • Informing the administrator about things like address changes, retirements and terminations

If you’re an employee

1. Stay or go

You’ll be automatically enrolled in the plan by your employer. However, if you don’t want to participate in the plan, you have a firm deadline to give notice.

2. Set your rate

If you decide to stay, you can set your own contribution rate. Otherwise, a government-determined rate will be chosen by default:

a. 2% of gross salary until the end of 2017
b. 3% in 2018
c. 4% as of 2019

Plan contributions are tax-deductible and grow tax-free.

3. Make your investment choices

4. Decide what’s next

Your contributions are not locked-in, which means you’ll have 3 options if you leave your employer:

  • Keep your money invested in the VRSP
  • Transfer your money to another retirement savings plan (VRSP, RRSP, etc.)1
  • Cash out1 (and pay tax)

1. Fees will vary depending on the plan administrator. For specific information, contact the administrator or visit Retraite Québec’s website.

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