VOLUNTARY RETIREMENT SAVINGS PLAN (VRSP)
With the aim of encouraging more workers to save for retirement, particularly in small and medium-sized businesses, Bill 39 on RVERs was tabled in May 2013 by the Quebec government and passed into law on December 3, 2013.
The new law on RSPs establishes the legal framework for the creation and administration of these plans. Any employer who, on June 30 of any year, has five or more covered employees in its employ must, within the following year, subscribe to an RVER and automatically enrol these employees.
APPLICATION DATE AND COMPLIANCE DEADLINES
The RVER rules will apply as of July 1, 2014.
|
Number of employees
|
Reference date
|
Compliance deadline
|
| 20 and over | June 30, 2016 | December 31, 2016 |
| 10 à 19 | June 30, 2017 | December 31, 2017 |
| 5 à 9 | To be determined | Date to be determined but after January 1, 2018 |
| Less than 5 | Not mandatory | Not mandatory |
TARGETED EMPLOYERS
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Any employer, as defined in the Act respecting labour standards (LSA), with an establishment in Quebec.
These employers, who will have to offer their employees the possibility of subscribing to an RVER, will be responsible for choosing an authorized administrator who offers an RVER and for informing employees. They will also have to register their employees, deduct their contributions and forward them to the RVER administrator. Employers will have no obligation to contribute to employee RVERs.
If the employer has a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) for which salary deductions can be made, or a Registered Pension Plan (RPP), as defined in the Income Tax Act, for the benefit of an employee, the employer will not be obliged to register and offer the employee access to a RVER.
EXAMPLEA company has 15 employees, 10 of whom benefit from a group RRSP with the possibility of a deduction at source. For the remaining 5 employees who do not benefit from the Group RRSP, the employer will be obliged to offer and enroll them in an RSP or offer them participation in the Group RRSP before the deadline.
EMPLOYEES CONCERNED
The RVER is therefore designed for employees whose employers do not offer RRSPs/TRIPS or RPPs:
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at least 18 years old; and
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with at least one (1) year’s continuous service within the meaning of the LNT.
Contributions to an RSP will be tax-deductible in the same way as contributions to another registered plan, such as an RRSP. Accumulated amounts are not taxable until withdrawn. Contributions will be accessible when needed, they will not be locked-in and the employee will be able to withdraw them whenever he or she wishes.
The contribution rate will be determined by the employee. You may decide at any time to modify your contribution rate according to your capacity and needs. In addition, investment options will be offered by the RVER administrator.
If the employer contributes to the RVER, these contributions will be locked-in and the employee will be able to use them as early as age 55 to obtain retirement income.
TARGETED ADMINISTRATORS
Administrators will have to meet stringent requirements and perform a number of functions in relation to employers and participants. Firstly, they must be a legal person as defined in the Act, an investment fund manager, a trust company or a life and health insurer, who must hold an authorization issued by the Autorité des marchés financiers. The list of authorized directors should be available from July 1, 2014.
Administrators will have to meet stringent requirements and perform a number of functions in relation to employers and participants. Firstly, they must be a legal person as defined in the Act, an investment fund manager, a trust company or a life and health insurer, who must hold an authorization issued by the Autorité des marchés financiers. The list of authorized directors should be available from July 1, 2014.
In addition to the mandatory registration of RVERs with the Régie des rentes du Québec, administrators must :
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make transfers and reimbursements requested by participants;
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provide registered employees with a summary of the plan;
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ensure that plan contributions are made; and
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provide information to the Régie, members and employers.
For more information on this new law, please do not hesitate to contact us.
Liliane Fortier, CPA, CA, LL.M. Fiscal authorities.
Partner, Canadian Taxation, SR&ED
514 878-0258
lfortier@demersbeaulne.com
Partner, Canadian Taxation, SR&ED
514 878-0258
lfortier@demersbeaulne.com
