Banked time to RRSP

[Brent.ff]

Wife has oodles of banked time and asked for a good chunk to be paid directly into her GRRSP. Company said no and they’ll be paying her out direct on top of her biweekly for 2 pay periods, to which she can then put into her non-group RRSP. Am I over thinking this in that it’s kind of BS to not allow it to go into GRRSP? Does she get taxed either way since it’s considered a taxable benefit and therefore doesn’t really matter?

[Rarasaurus]

Situation 1 - The money is taxed and paid to her so she has less to put in. Put into RRSP and get a refund in April however the refund is lower than the taxes paid.
Situation 2 - The company puts the RRSPs in and does not take off any tax so more gets invested right away but no refund. Situation 2 is better.

https://www.theglobeandmail.com/glob...article748772/

[Brent.ff]

Can they actually say no to putting it towards a GRRSP? Seems like they’re just being lazy to me

[Xtrema]

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Can they actually say no to putting it towards a GRRSP? Seems like they’re just being lazy to me

Most likely the payment system doesn't allow that kind of transaction since this isn't normal bi-weekly pay check but a special pay out for banked time. This may generate unnecessary paper work and potential error and audit headaches for the employer.

If you want tax back, just put it in your normal RRSP and file a return next spring.

[realazy]

Can she just increase the GRSP contribution for the next paycheck to approximately the same amount of the banked time to be paid out? She can change it back after the next pay period.

That way it will go into the GRSP pre tax.

[Brent.ff]

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Most likely the payment system doesn't allow that kind of transaction since this isn't normal bi-weekly pay check but a special pay out for banked time. This may generate unnecessary paper work and potential error and audit headaches for the employer.

If you want tax back, just put it in your normal RRSP and file a return next spring.

But they’re paying it out as part of the normal payroll, rather then a separate banked time paycheck..I’ll see what I can wrangle. Seems like something an employer should be willing to do when people sit on banked

[imranm]

Banked time is taxable. They can't just move it into a GRSP or RRSP. It has to be paid out.

[Xtrema]

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But they’re paying it out as part of the normal payroll, rather then a separate banked time paycheck..I’ll see what I can wrangle. Seems like something an employer should be willing to do when people sit on banked

Doesn't matter if the money show up on your payroll, under CRA is categorized as Special Payment.

https://www.canada.ca/en/revenue-age...nts-chart.html

I know some companies will pay bonus directly into GRRSP. But I would believe the logistic to set up for one off cases would be cost prohibitive if not frown upon. Not an accountant or payroll specialist, but I would think that's the case. For example: using $4K as pay out and you owe $2K taxes, if all $4K goes into GRRSP, then $1K of taxes will have to come off your normal paycheck. And if you has not hit CPP/EI maximums, those need to be deducted off your normal paycheck too. This is what I meant being complicated.

If the pay out is $4K, taxes worse case scenario is $2K. If you really want to $2K back, just drop $4K in your RRSP and file early next year. You will probably get your refund by March/Apr. If you have cash sitting around, not a problem. If you don't it's LOC the $2K for 3-4 months and incur interest around $30.

Really it's not worth hassling HR/Payroll over this at year end over something so minor.

Now if the pay out is like $20K, that's a different story.....

[Brent.ff]

Thanks Xtrema that helps a lot

[gwill]

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Can they actually say no to putting it towards a GRRSP? Seems like they’re just being lazy to me

I don't understand what your all worked up over. Company said no so that's your answer. At what point did you assume this is a protected right that an employee could demand?

[Brent.ff]

Certainly not worked up. My office will do it with me signing a form. Hers outright says no. Was curious what the difference would be, and xtrema summed it up. Im not an accountant so was unsure of the complexities required for this

anyway, its sorted

[ExtraSlow]

I've never worked anywhere that would do bonuses to grrsp. That's a nice idea but not at all common. B

[Xtrema]

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I've never worked anywhere that would do bonuses to grrsp. That's a nice idea but not at all common. B

We do that. But the downside is that paycheck that is released in the same time as the bonus drops, it's a good chunk less than normal paychecks due to all the CPP/EI/taxes implications.

But the good thing is that just like other GRRSP/Payroll deduction, you don't have to wait for a refund which means you ain't lending to the government interest free.

[blownz]

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We do that. But the downside is that paycheck that is released in the same time as the bonus drops, it's a good chunk less than normal paychecks due to all the CPP/EI/taxes implications.

But the good thing is that just like other GRRSP/Payroll deduction, you don't have to wait for a refund which means you ain't lending to the government interest free.

The only impact on your cheque should be if you haven't already maxed CPP and EI. Otherwise, if it is just provincial and federal tax it shouldn't affect what you clear. What else would there be? I don't get the comment above either "$4K as pay out and you owe $2K taxes, if all $4K goes into GRRSP, then $1K of taxes will have to come off your normal paycheck"

[Xtrema]

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The only impact on your cheque should be if you haven't already maxed CPP and EI. Otherwise, if it is just provincial and federal tax it shouldn't affect what you clear. What else would there be? I don't get the comment above either "$4K as pay out and you owe $2K taxes, if all $4K goes into GRRSP, then $1K of taxes will have to come off your normal paycheck"

I messed up. You are right. No adjustment on taxes. Like I said, not an expert.