Deferred Profit Sharing

A Deferred Profit Sharing Plan (DPSP) is an arrangement similar to a Defined Contribution Pension Plan (DCPP) whereby an employer distributes a portion of pre-tax profits to selected employees. The pension amount is not known in advance and is determined by the amount of contributions, investment returns and annuity and interest rates at the plan member's retirement. In contrast to a DCPP, plan members cannot make contributions and the employer's contribution is dependent on company profits. Employers may contribute an amount no greater than 9% of the employee's earnings for the current calendar year to the maximum contribution limit (half of the Registered Pension Plan maximum). The employer's contributions are a tax deductible expense and are not a taxable benefit to the plan member.