Contributions, benefits and transfers

Contributions

Member contributions must be credited to the member’s account. The member may deduct the contributions on their income tax return. The member’s contributions to the PRPP and the deductions which can be claimed are subject to the same limits as RRSP contributions. Member PRPP contributions and contributions made to RRSPs are counted together in determining the member’s excess contribution tax. The administrator of a PRPP must refund member contributions where the refund is necessary to reduce the amount of excess contribution tax the member must pay.

Employer contributions are credited directly to the member’s account. The employer contributions are not included in the member’s income for the year so they are not subject to payroll tax. Employer contributions must not exceed the RRSP dollar limit for the year without the consent of a member. Employer PRPP contributions reduce the member’s unused RRSP deduction room at the end of the year they are made.

Since the self-employed do not have an employer-employee relationship, all of their contributions are treated as member contributions.

Contributions must not be made to a PRPP after the year the member turns 71.

Benefits

Variable benefits:

Variable benefits may be paid from a PRPP. The variable benefit minimum amount must be paid at least annually if the member has reached 72 years of age and funds remain in the account. The PRPP minimum amount is calculated the same way that the money purchase RRP variable benefit minimum amount is calculated under paragraph 8506(1)(e.1) of the Income Tax Regulations.

To determine the PRPP minimum amount, the balance in the member’s account at the beginning of the year is multiplied by a factor related to the member’s age or the age of the member’s spouse or common-law partner from the table under subsection 7308(4) of the Regulations.

The date that variable benefits can start may be subject to PRPP standards legislation.

Lump sum payments:

Lump sum payments may be paid under the taxation rules. Additional conditions on lump sum payments may be imposed by PRPP standards legislation.

Transfers

Amounts can be transferred into a PRPP from another PRPP, a deferred profit sharing plan, a registered pension plan (subject to the applicable transfer limits), RRSP or RRIF of the individual or from the Saskatchewan Pension Plan. Transfers can also be made from the same vehicles of a spouse or common-law partner on marital breakdown or the death of the spouse or common-law partner.

Amounts can be transferred out of a PRPP to another PRPP, a registered pension plan, RRSP, RRIF or the Saskatchewan Pension Plan. Amounts can also be transferred out to purchase a qualifying annuity.

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