Pooled registered pension plans (PRPP)
A PRPP is a retirement savings option with lower administration costs for individuals, including those who are self-employed and who don’t have access to a workplace pension plan. This type of plan is portable, meaning it can move with you from job to job. You can contribute to your PRPP anytime between January 1 and the first 60 days of the following tax year, until the end of the year in which you turn 71 years old.
Similar to a registered retirement savings plan (RRSP), you and your employer can both contribute to your PRPP, up to your RRSP deduction limit, and you can deduct your contributions on your tax return to reduce your tax payable to zero. Remember, employer contributions to your PRPP will reduce your RRSP/PRPP contribution room for the year.
Note: If your employer contributed to your PRPP, these amounts aren’t included in your taxable income and are not tax deductible. However, you’ll still need to report these contributions on the Employer or employee contributions to a PRPP page in H&R Block’s tax software so that the Canada Revenue Agency (CRA) can determine your RRSP deduction limit. You can find this amount in the “employer contribution amount” box of your PRPP receipt.
Any PRPP contributions that go over your RRSP deduction limit are excess contributions. Contributions that are more than $2,000 over your RRSP deduction limit will result in a monthly penalty equal to 1% of the excess contributions! Refer to the CRA website for more information on what to do if you contributed too much to your PRPP. You can find your contributions for the year on the contribution receipt slip issued by the PRPP administrator. If you didn’t get a contribution receipt slip, contact your PRPP administrator to get a copy.
If you don’t deduct all your PRPP contributions in a given tax year, you can carry forward the unused amount. This carry forward amount will show up on your notice of assessment (NOA) as unused RRSP contributions.
Voluntary Retirement Savings Plan (VRSP)
VRSPs are group savings plans that are offered to Québec employees by their employers but administered by authorized administrators. If you’re self-employed, you can you can sign-up for a VRSP by contacting an authorized administrator (such as RVER de la London Life, RBC, or Banque Nationale Trust).
Your VRSP contributions are tax deductible and can even be deducted from your pay, giving you immediate tax savings.
Your employer can also make contributions to your VRSP. These contributions aren’t taxable and should not be included in your income or deducted from your income. However, you need to enter the contributions your employer made to your VRSP on the Employer or employee contributions to a PRPP or VRSP page in H&R Block’s tax software. You can find this amount on your VRSP receipt.
Where do I claim this?
- On the QUICK ENTRY tab, click the QUICK SLIP icon. You will find yourself here:
- Type PRPP contribution receipt in the search field and either click the highlighted selection or press Enter to continue.
- When you arrive at the page for your PRPP/VRSP contributions, enter your information into the tax software.
Note: You can also enter your PRPP/VRSP contributions on the Employer or employee contributions to a PRPP or VRSP page under the PENSION PLANS AND INVESTMENTS icon of the PREPARE tab.