How Group RRSPs and Group TFSAs work

Registered Retirement Savings Plans (RRSPs) help Canadians save towards retirement and offer certain taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition benefits. Tax-freeTax-free Money that you do not pay tax on.+ read full definition Savings Accounts (TFSAs) are a savings vehicle that Canadians can use towards retirement or major purchases. There are individual RRSPs and TFSAs as well as group plans. The main difference is that group plans are set up by your employer.

If you have a Group TFSATFSA See Tax-Free Savings Account.+ read full definition or a Group RRSPRRSP See Registered Retirement Savings Plan.+ read full definition, there are some important things to know about your plan.

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Five things to know about Group TFSAs

  1. All TFSA investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition earningsEarnings For companies, it’s the money they make and share with their shareholders. For investors, it’s the money they make from their investments.+ read full definition are tax-sheltered, but contributions are not tax-deductible.
  2. All TFSAs have annual contributionContribution Money that you put into a savings or investment plan.+ read full definition limits that are the same for all Canadians. If you don’t contribute the full amount each year, you can carry forward the unused amounts.
  3. You decide how your money is invested from the investment optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition your employer makes available.
  4. You can take money out when you want, for any reason, without paying any tax.
  5. If you take money out, you can re-contribute it the following year, in addition to the annual maximum.


While you’ll have a variety of investment options to choose from, you’ll likely have less choice than you would with an individual TFSA.

Four things to know about Group RRSPs

  1. A Group RRSP is designed to encourage you to save at work by contributing through payroll deductions.
  2. It’s possible that both you and your employer may contribute, depending on the rules of the plan.
  3. All RRSP contributions (both yours and your employers) are tax-deductible to you — and all investment earnings are tax-sheltered.
  4. Like an individual RRSP, you decide how your money is invested. Your employer will provide a range of investment options to choose from. You’ll likely have fewer investment choices than you would with an individual RRSP.


There may be restrictions on withdrawals from your Group RRSP while you are employed. Understand the rules of the plan before you investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition.

What happens to your Group RRSP If you leave your employer

The money in your Group RRSP stays with you, not your employer. If you leave your employer, your money can be:

  • transferred to your own individual RRSP (or RRIF if you want to be receiving immediate income and if you are eligible to transfer to a RRIFRRIF See Registered Retirement Income Fund.+ read full definition),
  • used to buy an annuity, or
  • taken in cash (it will be taxed as income in the year you receive it).


  • Group RRSPs and TFSAs work the same way as individual plans. The main difference is you contribute to your plan through payroll deductions.
  • There may be matched contributions, depending on the plan.
  • You and your employer can contribute to the Group RRSP depending on the plan.
  • Your money is not locked in if you leave your employer.
  • Understand the contribution and withdrawal rules for your Group TFSA and Group RRSP.
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