A Deferred Profit Sharing Plan (DPSP) is a simple, flexible arrangement whereby a Plan Sponsor distributes a portion of the company's pre-tax profits. Specified shareholders (i.e., individuals who own, directly or indirectly, more than 10% of company stock) are excluded. Employees do not contribute to the plan.

Sponsor advantages

• plan design flexibility
• may be set up in conjunction with a Payroll Deduction RRSP or a pension plan
• contributions are not required in unprofitable years
• all contributions and administration expenses are tax deductible
• flexible contributions - the Sponsor has ample freedom to reward in relation to member performance

Member advantages

• deferred, tax-sheltered compensation
• contributions vest in members after two years of plan participation with no locking-in rules
• at termination or retirement, contributions can be cashed-out, or used to purchase an annuity or a Registered Retirement Income Fund (RRIF)
• group buying power - higher interest rates and favourable investment management fees