Members of an RCA enjoy the following benefits:

• Increases tax-deferred retirement savings so they are in line with career income
• No impact on RRSP or IPP contribution limits
• Exempt from payroll taxes and not a taxable benefit until received
• Funds are not locked in with no required retirement date
• Benefits are eligible for income splitting if received with a lifetime pension and member is not a business owner
• Assets may be creditor protected
• Pre-retirement survivor benefits for beneficiaries

Participating Employers of an RCA enjoy the following benefits

• Significant contributions that are 100% tax deductible
• No provincial pension regulation, enabling more flexibility in plan design
• Competitive advantage to safeguard loyalty and retain key executives with golden handcuffs
• Exceed traditional retirement planning methods and help maximize employees’ retirement savings
• Assignable as collateral for company loans if RCA is for the benefit of the business owner)
• A common solution to provide benefits for non-resident executives

RCAs are non-registered arrangements, most often used as a type of SERP to provide adequate and comparable retirement income for high-income earners. Ideally suited for business owners, key executives, incorporated professionals, and athletes, these arrangements also enable employers to provide other benefits that cannot be funded under a tax-sheltered arrangement. In particular, funding is supplemental to the limited contributions and tax benefits under registered vehicles. As a result, RCAs are a fundamental aspect of our pension consulting services and continue to be a popular method of supplementing retirement income while helping both employers and employees benefit from a well-designed pension plan.

For highly paid executives, their pension contribution or benefit level often exceed the registered plan limits based on the same contribution or benefit formula for the registered plan. Hence it is common for employers to provide a non-registered SERP to provide pension contributions or benefits in excess of the registered limits. These SERPs can either be funded, unfunded or partially funded. When the SERP is funded through a trust fund, it is deemed to be an RCA under tax legislation. Westcoast Actuaries assist our clients to design and implement their SERPs/RCAs based on the balanced needs and objectives of the employers and the executives. We also provide cost-effective administration solutions for these arrangements.

Some unique provisions that may be incorporated into a plan include:

• Customized vesting schedule designed to meet the corporation’s objectives
• Variety of investment options to accomodate different risk profiles for participating executives to actively manage the ‘investments’ in their notional accounts.
• Unique benefit statements that show updates on the participating executives’ respective accounts, reflecting accumulated amounts from “contributions” and “investment earnings” separated for vested and non-vested components