The Contributory Professional Savings Plan (CPRSP) helps fund retirement for BC physicians by funding Registered Retirement Savings Plan (RRSP) and Individual Pension Plan (IPP) contributions. Proof of matching physician contributions to an RRSP or IPP is required before the benefit will be paid.
I recently learned that a physician’s contribution to a Registered Pension Plan (RPP) also qualifies as a matching contribution.
Some physicians have earnings that qualify for a CPRSP entitlement and have employment income from another source that includes a pension plan. Because of the pension plan, the amount that can be contributed to an RRSP is reduced.
There may not be enough RRSP deduction room to accommodate both the physician’s matching contribution and the CPRSP benefit. RRSP overcontributions in excess of $2,000 are subject to a 1% monthly penalty, and withdrawals of CPRSP benefits, matching contributions and related income are not permitted under the terms of the CPRSP.
The CPRSP cannot be used to fund a RPP, but a physician’s contribution to a pension plan can be used as matching to claim the CPRSP entitlement. The CPRSP benefit must still be paid to a personal or spousal RRSP where the physician is the registered contributor.
The CPRSP entitlement can be claimed by submitting the application along with a year-to-date pay stub showing the employee deduction applied to the pension plan.
My thanks to Russell MacKay of RBC Dominion Securities for bringing this to my attention.