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Overview
A Deferred Profit Sharing Plan (DPSP) is an employer-sponsored registered retirement savings account sponsored by your employer. Your employer can use this account to share company profits with you, helping you save for retirement.
Contributions to your DPSP
Only your employer can make contributions to your DPSP account. You can’t make contributions yourself.
Employer contributions to your DPSP reduce your personal Registered Retirement Savings Plan (RRSP) contribution room for the following tax year on a dollar-for-dollar basis. For example, if your employer contributes $5,000 to your DPSP in the current year, your available RRSP contribution room for the next year decreases by $5,000.
Vesting requirements and timelines
Vesting determines when employer contribution amounts legally belong to you (the employee) and your employer can’t take them back. Once the contributions vest, you own all funds contributed up until that point. Additionally, you’ll own all future employer contributions.
Your vesting timeline and when you gain ownership of your employer’s contributions depend on the plan your employer chooses. You receive your vesting date when you first open your account and can find it again on your account details screen.
Investment earnings (such as interest, dividends, or capital gains) on your contributions follow the same vesting schedule as the contributions that generated them. Once your contributions vest, any earnings associated with those contributions also vest and belong to you.
Make a withdrawal from your DPSP account
We currently don’t support direct withdrawals from your DPSP yet. Instead, you must first contact our Client Success team to request an internal transfer from your Wealthsimple DPSP account to a Registered Retirement Savings Plan (RRSP) or a Registered Retirement Income Fund (RRIF) Wealthsimple account.
Then, you can make a cash withdrawal from your RRSP or RRIF. These accounts have their own specific processes and rules, so please review how they work and any tax implications that may occur before making your withdrawal.
Learn more about RRSP and RRIF withdrawals:
Frequently asked questions
When am I eligible to open a DPSP account?
Your employer defines when you become eligible to open a DPSP account. This could be based on your employee start date or a custom date defined by your employer.
What is my DPSP invested in?
Your DPSP funds are generally invested in the same types of managed portfolios available for our managed investing accounts. However, you’ll complete a risk assessment so we can recommend a portfolio with a risk profile that aligns with your goals.
What's my vesting start date?
Follow these steps to find your vesting start date:
- Log in to your Wealthsimple account
- Select your DPSP
- Navigate to the Vesting date card on the right side of the screen
Are contributions and investment earnings in a DPSP considered taxable income?
Your employer contributions and investment earnings aren't taxable. However, you'll pay income tax when you:
- Withdraw funds from your DPSP (not currently available)
- Receive DPSP payments upon retirement
How are my employer's DPSP contributions reported during tax season?
Employer contributions, including vested and unvested amounts, are reported in box 52 of your T4 slip. For any tax-related questions, we recommend consulting a tax professional.
What happens to my RRSP contribution room if I leave my employer?
If you leave your employer before your DPSP contributions are fully vested, you will forfeit those contributions. However, since your employer's DPSP contributions originally reduced your RRSP contribution room for the following year, losing those contributions will restore your full RRSP contribution room.
Wealthsimple (the DPSP administrator) is responsible for filing the correction to restore your RRSP contribution room.
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