The Facts of Registered Pension Plan (401k) In US and Canada
A. Types of Registered Pension Plan Registered Pension Plan is a form of a trust that provides pension benefits for an employee of a company upon retirement. RPPs (401k) are registered with the government. The employee and employer, or just the employer make contributions to this retirement plan until the employee leaves the company or retires. Contributions to an RPP are tax deductible for both the employee and the employer. Contributions to the plan and gains on underlying assets are tax deferred, so the funds are taxed when they are withdrawn from the plan.