Use Retirement To Start Business

Use Retirement To Start Business – With an increasingly competitive market for talent, more organizations are looking for ways to stand out as employers.

One way to gain a competitive advantage is to offer employee access to a group retirement plan. This benefit has shown wide appeal among millennials and baby boomers alike. And given the challenges Canadians face to save enough money to fund a long retirement, it’s imperative that more and more employers offer group pension plans.

Use Retirement To Start Business

This raises the question of what kind of plan should be set up. Fortunately, there are many options that address different priorities for both employers and employees.

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Group RRSPs (or GRSPs as they are sometimes called) have become a very popular option for small businesses in Canada. This is because they are straightforward to implement, do not require a plan text and trust agreement, and provide plan members some flexibility in how to use their savings.

With an RRSP, an employee can borrow up to $35,000 tax-free to finance a home purchase as part of a home purchase plan (HBP). This feature is especially attractive to millennials who are struggling to break into the housing market. Tax-free borrowing is also allowed to fund continuing education under a Lifelong Learning Plan (LLP).

Yet the flexibility afforded by RRSPs also proves to be their Achilles’ heel. While the two withdrawal options mentioned above can indirectly contribute to better retirement outcomes for plan members, group RRSPs enable employees to withdraw money from their nest egg at any time. Unlike the case of HBP and LLP, all such withdrawals are taxable.

As many plan sponsors can attest, the tax penalty is rarely enough to dissuade employees from increasing their RRSP savings. That’s why some organizations have implemented withdrawal penalties whereby the company match will be suspended for a specified period of time when an employee withdraws money from their RRSP account.

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Some employers use deferred profit sharing plans as an alternative or supplement to RRSPs. Employees do not contribute to DPSP, as it consists of the contribution that employees make from the company’s pre-tax profit. This is why DPSPs are often combined with RRSPs, in which the latter will only consist of employee contributions. The fact that DPSP contributions do not attract payroll tax has led to the growth in popularity of this combination.

Unlike an RRSP, funds contributed to a DPSP do not vest immediately and employers have the option to set a vesting period of up to two years. This means that employers can retain DPSP contributions if an employee leaves the company before two years have passed. Many organizations use this feature as a retention incentive.

Employers also have the ability to prevent employees from opting out of DPSP as long as they continue to work with the organization. This applies after a two-year period and is perhaps one of the main advantages that DPSPs hold over RRSPs as a savings vehicle. However, if an employee moves to another institution after the vesting period, they are eligible to withdraw the funds.

For more results-oriented employers, DCPPs may be the best option to ensure employees save enough money for retirement. Unlike RRSPs and DPSPs, DCPPs do not allow for any withdrawals. Employees who leave an organization that offers a DCPP must either transfer the funds to another DCPP or to a closed retirement account (LIRA). Thus, any contributions that go into the DCPP are not intended to serve any purpose other than to fund the plan member in retirement.

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As fully-fledged pension plans, DCPPs require a plan text and trust agreement. Some employers also choose to give their employees options to use the HBP and LLP offered by the RRSP. But as noted above, RRSP flexibility can undermine efforts to prepare employees for retirement. One solution to this problem is to supplement the DCPP with a voluntary (only employee contributes) RRSP.

For completeness, we’ve included defined benefit plans in the mix. Undoubtedly, DBPPs are a popular choice among employers because of the guaranteed retirement income they offer plan members. Instead of relying on the performance of their portfolio, employees in the DBPP will receive monthly payments for life based on a predetermined formula.

Under the DBPP, it falls to the employer to ensure that there are sufficient funds in the plan to meet the obligations towards retired employees. This significant financial liability has been a major factor behind the decline of DB plans over the past thirty years.

Regardless of the plan type an employer chooses, determining the design is an important step in setting up a retirement plan. Below are some considerations that should be made before proceeding with the implementation process:

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Once the design of the plan is established, employers can move toward implementation. This process can be divided into the following steps:

As a plan provider, Open Access offers turnkey solutions where we manage the entire project from start to finish. We know that setting up a plan can raise many questions, and that’s why we offer our support and guidance through plan design and implementation. If you would like to learn more about this, please fill out the contact form here and our friendly sales team will be happy to reach you.

As a group pension plan provider, Open Access is changing the way group pension plans are run by employees who don’t need to make investment decisions on their own. We do this as a trust, which means no proprietary products, zero conflicts of interest, and no hidden fees.

Group retirement plans offer a wide range of benefits to businesses, from increased efficiency and productivity to a more engaged workforce.

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An Open Access team is available to assist interested sponsors with advice. If interested, simply fill out the contact form!

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The Canadian job market is full of exciting opportunities for employees to explore. Open Access is a group retirement plan provider.

We are a Canadian group RRSP provider. In this blog, we outline exactly what a group pension plan is and the custom plans we provide for our members.

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It is fair to say that our lives have changed a lot since March 2020. From work and travel to retail and social engagements, we all have to adapt to the new normal. CoVID-19 has also affected our ability to plan ahead.

Looking for a Canadian group RRSP provider? Open Access can help you by offering a variety of group retirement services and plans.

Looking for a Group Retirement Savings Plan Canada? Open Access is a Canadian group RRSP provider that offers you a variety of retirement savings plans.

In the past year and a half since the pandemic broke out, to say the world is a different place would be an understatement.

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© 1997-2023 Open Access Ltd. all rights reserved. Open Access Ltd. Using the website constitutes acceptance of our Terms of Use and Privacy Policy. I was recently in a conversation with retired women. Some of them were very happy to retire. Many were bored, depressed, and lacked a sense of purpose. This prompted me to write this article.

Retirement is a major transition in anyone’s life. From having a regular work schedule for many years, you are forced to not have the routine that you are used to.

A retired woman said to me one year after her retirement: I have done everything I planned, what should I do now?

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I’m not talking about a stressful business that will take up a lot of your time. Why else retire if you are so busy? I am talking about a business that you are passionate about and that you can do from home.

But why start a business? You can ask. Why can’t I just follow my hobby or do some projects?

First, you have skills that you can use to help others. Hobbies and projects are more for you than others.

Helping others gives you a sense of fulfillment that gives you a purpose. What are your strongest skills? You can become a coach or consultant to teach others what you are good at. It includes many interesting things that you can do. Doing a podcast, making a YouTube video, writing a book — it’s all connected to your consulting business.

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If you don’t know how to do this, you can ask your children to teach you, do research, join a class, or hire a coach.

It’s good to have money coming in, even if you have a pension. This gives you an extra sense of security. It should not be the amount of money you earned in your previous job, but something that will be a new source of income for you.

It takes at least 6 months after starting your business to get noticed

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