Retirement Compensation Arrangements (RCAs)
A Retirement Compensation Arrangement (RCA) is a popular way for successful corporations to enhance retirement savings for themselves and their valued executives. These arrangements can also be used to provide pension benefits for non-resident executives who are not allowed to contribute to Registered Retirement Savings Plans.
An RCA is a type of Supplementary Employee Retirement Plan – an arrangement between an employer and employee to provide retirement benefits. These benefits are typically funded by the employer, but employee contributions are possible. Contributions are tax deductible by the company and are a non-taxable benefit for employees.
RCA Overview Handout
RCAs are most beneficial in situations where a company has significant profits. They have more flexibility than an Individual Pension Plan. For example, they aren’t subject to provincial pension regulations and do not have mandated valuation requirements. They can be designed on a defined benefit or a defined contribution basis. And owners of RCAs can borrow up to 90 per cent of contributions to finance their operating company.
Lesniewski Moore Consulting Group’s actuarial professionals can provide assistance designing the most appropriate arrangement for your needs as well as preparing the necessary agreements and tax forms.