Did you know that you could get money to boost your retirement savings — just for working as a physician in B.C.?
If you’re a British Columbia doctor, you may be eligible for a reimbursement for your retirement savings through the Contributory Professional Retirement Savings Plan (CPRSP).
Here are 7 things you need to know.
1. Who’s eligible for the CPRSP
If you’re paid under the fee-for-service model — as are most physicians in B.C. — you may qualify for the CPRSP, which is a benefit negotiated between Doctors of BC, the Medical Service Commission and the Government of British Columbia.
You may also qualify if you are paid sessional or service contract income by one of the six health authorities in the province.
2. Basic CPRSP benefit + length of service
The benefit has two components: a basic benefit available to all eligible physicians based on eligible income; and a length of service (LOS) benefit based on how long you’ve been practising in B.C. — the minimum being nine months of work earning eligible income while covered by the Canadian Medical Protective Association.
3. New this year: No matching required
This year, the “matching” requirement has been removed for all physicians. However, you must first contribute your own funds to a registered account. After your online claim is submitted and processed, you will be reimbursed up to your CPRSP benefit amount, directly deposited into your bank account (no more cheques!).
4. New this year: TFSA
Starting this year, you can contribute your CPRSP benefit to a tax-free savings account (TFSA) in addition to your RRSP, spousal RRSP and corporate individual pension plan (IPP). You can deposit the lump sum in one account or split the amount among different accounts.
There are tax implications, depending on which account you invest in. Your MD Advisor* can make sure you’re on the right track so you can maximize your returns and minimize your taxes.
5. CPRSP is a taxable benefit
Because it is a taxable benefit, your CPRSP amount will be included in your personal income.
RRSP: If you contribute to your RRSP, the taxable CPRSP income will be offset by the RRSP deduction, and you would not see an increase in overall personal taxes.
TFSA: If you contribute to your TFSA, you won’t get a deduction so there will be an increase in your personal taxes. Talk to your MD Advisor about how to optimize the CPRSP benefit based on your situation.
6. The application process
Doctors of BC will send you an email notification once the CPRSP is available to claim, confirming your entitlement amount. You will make your contribution, using your own funds first. Then submit your application online through the Doctors of BC website and attach your proof of contribution. Once your submission has been received, your CPRSP benefit will be deposited into your bank account.
7. Don’t miss claiming your benefits
If you don’t apply for the CPRSP, your basic benefit will expire in three years. For example, the CPRSP benefit for 2020 expires on March 31, 2023.
If you’ve missed any of the three previous years’ benefits (2017, 2018, 2019), your entitlement details are available on the Doctors of BC website. All claims will need to be submitted online.
To learn more
MD Financial Management’s close relationship with Doctors of BC means your MD Advisor can work with you to understand, apply for and optimize your CPRSP benefit. We’ll help you navigate today’s challenges and save for tomorrow with the right advice.
If you’d like to deposit your contribution in an MD RRSP, TFSA or corporate IPP, contact an MD Advisor today.
* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.
The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice nor is it intended to replace the advice of independent tax, accounting or legal professionals.