Frequently asked question
Question: We are processing the executive bonuses next pay and some employees have requested that we direct their bonus to a Registered Retirement Savings Plan (RRSP), what are the guidelines?
03/20/2006|hrreporter.com|Last Updated: 03/20/2006
Upon request from the employee, employers may transfer bonus payments tax free to the employee's Registered Retirement Savings Plan (RRSP) provided that the employer has reasonable grounds to believe the amount being transferred will not exceed the employee's RRSP deduction limit.
The employer should request from the employee a copy of their
Notice of Assessment
or a letter stating that he/she has the sufficient room.
The amount of the transfer must be made payable to the financial institution. Although the amount is not subject to income tax, the bonus is still subject to Canada/Quebec Pension Plan, Employment Insurance and Quebec Parental Insurance deductions to the annual maximum.