10 Frequently Asked Questions about Group RRSPs in Kitchener-Waterloo
Are you considering participating in a Group Registered Retirement Savings Plan (Group RRSP) offered by your employer, or perhaps you're already enrolled but unsure of how it all works? It's essential to understand how these plans function, how they differ from personal RRSPs, and the implications of your decisions on taxes and future financial stability.
As tax and retirement planning professionals in Kitchener-Waterloo, we can help clear up your confusion! Let’s dive into ten common questions asked about Group RRSPs in 2025.
Frequently Asked Questions about Group RRSPs, answered by Retirement Planning Professionals!
1. How does a Group RRSP work?
A Group Registered Retirement Savings Plan, or Group RRSP, is a type of retirement savings plan provided by an employer that allows employees to save for retirement on a tax-deferred basis.
The Group RRSP is established by the employer. Employees can participate voluntarily and choose from various investment options to help their savings grow passively. Contributions to the Group RRSP are often made by automatic payroll deductions, but you’ll also have the option to make direct contributions. Often, employers will match a portion of the contributions as well.
Additionally, contributions made to a Group RRSP are deducted from the employee’s taxable income.
Ask one of our tax strategy professionals about how Group RRSP taxes work.
2. What happens to my Group RRSP if I quit?
Even if you leave your job, the money in your Group RRSP still belongs to you. You can transfer your Group RRSP funds to a Personal RRSP or RRIF, where the money will continue to be tax-free. Alternatively, you could withdraw the money from the account entirely. However, if you do withdraw the money instead of transferring it, that money is considered taxable income.
3. What happens to my Group RRSP if I get fired?
Regardless of what reason you were terminated from your position, the money in your Group RRSP still belongs to you. You should receive an email from your Group RRSP provider upon being terminated which outlines your options for transferring the money. They may offer to transfer the funds to a Personal RRSP plan under the same provider. You can transfer your Group RRSP funds to a Personal RRSP or RRIF.
4. Who can contribute to my Group RRSP?
You and your employer are able to contribute to your Group RRSP through payroll deductions, direct deposits, and your employer matching some or all of your contributions.
You may also have the option for a Spousal RRSP under your Group RRSP. Under a Spousal RRSP, you can split the funds with your spouse, and your spouse can make their own contributions. This strategy can reduce the tax you pay once you actually retire.
Keep in mind that contributions made by yourself, your employer, and your spouse all take up your annual RRSP contribution room.
5. Should I get a Personal RRSP if I already have a Group RRSP?
The short answer is…
If you’d like more control over the management of your retirement savings and investments, and have enough annual contribution room, you should get a personal RRSP.
If your Group RRSP has low fees, employer matching contributions, little annual contribution room, and you aren’t interested in more control over your retirement savings plan, then no, you shouldn’t get an additional Personal RRSP.
Whether you should get a Personal RRSP while having a Group RRSP will depend on your personal needs and desire to manage your retirement funds on your own.
Looking to retire early? Or maybe you just want better financial management to grow your retirement savings? Learn how one of our retirement planning professionals can help!
6. Can I transfer my Group RRSP to a Personal RRSP?
Yes, once you leave your employer, you can transfer your Group RRSP to a Personal RRSP.
You may be able to transfer your Group RRSP to a Personal RRSP while still in the job, but it’s likely that your group plan has some restrictions and rules in place in cases like these. Refer to the details of your Group RRSP plan before trying to transfer your funds to a Personal RRSP.
If your employer is matching contributions, we would recommend staying with your Group RRSP to benefit from the additional contributions.
You can open your own Personal RRSP if you like, but keep in mind that your annual contribution room is shared by both RRSP accounts. If your Group RRSP maxes out your contribution room for the year, any additional contributions you make to your Personal RRSP will become taxable, and vice versa. You can also be penalized for overcontributions.
7. Are employer contributions to a Group RRSP a taxable benefit?
Yes, employer contributions are considered taxable income and will need to be added to your T4 slip.
Contributions made by the employee, including automatic contributions that were deductions to their salary, are not taxable.
Ask us about correctly declaring taxable income on your tax return!
8. Do employer Group RRSP contributions reduce RRSP contribution room?
Yes, the contributions made to your Group RRSP by your employer reduce your total contribution room.
If you have multiple RRSP accounts, any contributions made to your Group RRSP also reduce the total contribution room for your other RRSP accounts.
9. What is the difference between a Group RRSP and a locked-in RRSP?
A Group RRSP is a retirement savings plan offered through your employer. Your employer deducts a small portion of your paycheque and contributes it to your Group RRSP automatically. Optionally, your employer may match all or some of your contributions.
A Locked-in RRSP, better known as a Locked-in Retirement Account (LIRA), is another retirement savings plan set up by yourself. The main difference is that your LIRA does not take contributions, but instead holds locked-in pension money from your previous employers. In most cases, you can’t withdraw from your LIRA until you reach retirement age.
Ask our retirement planning professionals about getting an LIRA!
10. How do I report my Group RRSP on my tax return?
On line 20800, you can deduct contributions made to your RRSP. This does not count employee matching contributions, and should only include the contributions you made as shown on your Group RRSP contribution receipt. You should receive a receipt of your Group RRSP contributions leading up to tax season.
Avoid penalties and ensure your taxes are filed correctly by reaching out to a Kitchener-Waterloo tax professional!