A collection of individual Tax- Free Savings accounts that shelters your employees’ investment earnings and withdrawals from tax while allowing them to reach a variety of short and long-term goals.
- Investment Options: Investments are selected by employees based on choices available in the plan.
- Spousal Plans: NA
- Contribution Sources: Contributions can be made by employees and/or employers.
- Contribution Limits: Annual contribution limits can be found on the CRA website. Unused contribution room from previous years can be carried forward indefinitely. Both employer and employee contributions count towards annual limits.
- Sponsor Tax Implications: Employer contributions are considered part of an employee’s salary and are tax deductible as an expense and subject to payroll taxes such as CPP and EI.
- Member Tax Implications: Payroll contributions are part of income for tax purposes – both employee and employer contributions. Investments grow tax-free.
- Regulation: Governed by the Income Tax Act and regulated by the CRA.
- Member Withdrawals: Withdrawals are tax free, do not count as income and are not subject to fees.
- Restrictions or Vesting: No vesting requirements. Sponsors can establish a plan with a withdrawal notification, which requires employees to inform the sponsor if an employee withdraws funds. Notification of withdrawal requires employees to complete a withdrawal form and have it signed by the sponsor prior to a withdrawal being made. Sponsors may choose to suspend matching contributions for a period of time if funds are withdrawn from the plan.
- Termination and Retirement: Assets can be kept in an individual TFSA account with no impact on the employee (RBC investments and account numbers remain the same) OR Assets can be transferred to another TFSA, or taken as a cash withdrawal.
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A Capital Accumulation Plan (CAP) is a tax assisted investment or savings plan that permits the members of the CAP to make investment decisions in accordance with options offered within the plan. A Group Savings plan is considered a CAP. The Joint Forum of Financial Market Regulators issued the CAP guidelines to clearly outline the responsibilities of parties involved in a CAP and to ensure that members participating in a CAP were receiving the information and assistance they needed to make investment decisions.
RBC Royal Bank will work with you to ensure that your plan complies with the CAP guidelines.See complete CAP Guidelines