Closing a deferred profit sharing plan

From: Canada Revenue Agency

Termination

A deferred profit sharing plan (DPSP) can be closed if an employer terminates the plan, or if the Minister revokes the plan’s registration under the Income Tax Act.

Termination by an employer

If an employer wishes to close a DPSP, then the employer and/or trustee will need to send a letter, or a copy of the board resolution stating the:

• date and
• method of distribution of the plan assets to the beneficiaries.

If a DPSP has more than one participating employer and one of the employers no longer wants to contribute to the plan, the exiting employer and/or trustee will need to send a letter, or a copy of the board resolution stating the:

• date and
• method of distribution of the plan assets to the beneficiaries for that particular employer.

The particular plan can maintain its registered status under the Act for the remaining participating employers.

Send us your letter

Due to a building refit spanning multiple years, the Registered Plans Directorate’s mailing address has been temporarily changed. Please use the following address for all correspondence until further notice:

Registered Plans Directorate
Canada Revenue Agency
2215 Gladwin Cres
Ottawa ON  K1B 4K9

Revocation

The Minister may revoke the registration of a DPSP if it no longer complies with the Act. In addition, there are rules that apply to a revoked plan.

For more information on when the Minister may revoke a DPSP, as well as the rules that apply to revoked plans, see paragraphs 35 and 36 of IC77-1R5 Deferred Profit Sharing Plans.