A retirement compensation arrangement (RCA) is a non-registered plan set up by an employer to provide benefits to an employee or group of key employees upon retirement, termination a change in service.
Likewise, people ask, how does an RCA work?
An RCA is a plan that is funded by contributions from employers and employees to a custodian who manages the funds. RCAs are used to fund the retirement of an employee, their loss of employment or a substantial change in the services that they provide.
Also, how many years do you need to work to be vested in the pension plan? Under federal rules, private-sector plans must let you become at least 20% vested in your benefits after year three. You must be fully vested by the time you’ve completed seven years of service. The vesting rules work a bit differently for church and government pension plans.
Subsequently, who is an ideal candidate for an RCA?
Executives, professionals and business owners with T4 earnings greater than $150,000 may be ideal candidates. Contributions to an RCA are tax-deductible to the sponsoring company, and are excluded from the members’ income.