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Understanding
Self-Directed Group RRSPs
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In a nutshell, a self-directed
group registered retirement savings plan (RRSP) is a group RRSP with
a self-directed component. Payroll deductions are made in accordance
with the agreement you, the plan sponsor, has with your plan supplier,
but the contract is with the individual plan member, not you. Securities
transactions are processed directly between the plan member and the
supplier's brokerage operation.
For plan sponsors, a self-directed group RRSP generally involves
less administration than a conventional group savings plan. Reporting
can still be individualized to meet your specific needs but with
a self-directed plan, involves just tracking payroll contributions.
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In the U.S., the self-directed option is more common. Within a
401 (k) plan, a self-directed brokerage window looks like any other
defined contribution (DC) investment option, except that when an
employee signs up, they're actually opening up an account with an
online brokerage firm. The employee pays a fee to open the account
and a monthly administration charge as long as the account is open.
The participant's contributions are matched by the company and the
plan members must pay trading fees and commissions. Essentially,
plan members can do almost anything a retail client of the brokerage
firm can do.
For Canadian plan sponsors, fiduciary responsibilities are still
a primary concern. Giving plan members complete freedom to invest
their retirement funds as they see fit through a self-directed group
RRSP may seem like an enormous fiduciary liability to many plan
sponsors. But more investment choice empowers plan members. With
a self-directed option, employees are not held hostage to the performance
of the particular equity or bond manager the plan sponsor has selected
as part of the DC investment package.
Further reading:
Annual
Defined Contribution Plan Report
The
Evolution of Group RRSPs
Group
RRSPs on Trial
A
Nest of Their Own
Other sources of information:
Employee
demand as driving force behind self-directed brokerage accounts
The
individual stock craze
New
401(k)s let investors control their own destinies
Don't
jump out the window!
Real-time
trading: Coming soon to a 401(k) near you?
Web site:
www.self-directed401k.com
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Sun
Life Securities Inc. is committed to providing accessible investment
services that meet the evolving needs of independent Canadian investors
by offering innovative, easy-to-use products and services. When
you choose Sun Life Securities Inc., you are assured of getting
superior service and great value in self-serve brokerage services.
The self-directed option to a group savings plan gives employees
greater investment choice and more control over their investment
portfolio, while still maintaining many of the benefits of group
plan participation.
Sun Life Securities Inc. is currently registered to offer its services
in all Canadian provinces. Sun Life Securities Inc. is a member
of the Sun Life Financial Group of Companies and is a member of
the Investment Dealers Association of Canada, the Toronto Stock
Exchange and the Canadian Investor Protection Fund.
For more
information, download this PDF from Sun
Life Securities Inc.
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