Page 104 - A Canuck's Guide to Financial Literacy 2020

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Vesting Period

DPSP contributions have a maximum vesting period of up to two years or 24 months.
Vesting period could be less, depending on the plan policy. The vesting period was created
in order to encourage employee tenure. Once the vesting period has passed, funds in the
DPSP can be withdrawn, discussed below.

Pension Adjustment Reversal

If the employee leaves the plan before the vesting period has passed, they will forfeit the
employer’s contributions and a pension adjustment reversal (PAR) will be triggered. A
pension adjustment reversal is the opposite of a pension adjustment. The employee’s
RRSP contribution room will increase by the amount that they forfeited. PAR will be
reported on a T10 slip.

Withdrawing from a DPSP

Upon maturity of the vesting period, the employee can leave the funds in plan to stay
invested or they may withdraw it.

Withdrawal Options

▪ Lump Sum Withdrawal
The employee can choose to receive the funds in the DPSP in cash but the cash
received is considered taxable income
▪ Transfer to an RPP, RRSP RRIF
DPSP funds can be transferred tax free to the aforementioned registered accounts.
Your RRSP contribution room is not affected as when you deposited the funds, a
pension adjustment was triggered
▪ Purchase an annuity
The employee can choose to purchase an life annuity or term annuity not exceeding
15 years
▪ Transfer to another DPSP
Funds can be transferred to another DPSP if that particular plan has at least 5
beneficiaries
▪ Annual Payments
The employee can choose to receive equal annual payments over a course of 10
years.