Deferred Profit Sharing Plan - DPSP

What is a 'Deferred Profit Sharing Plan - DPSP'

A deferred profit sharing plan (DPSP) is an employer-sponsored Canadian profit sharing plan that is registered with the Canadian Revenue Agency. On a periodic basis, the employer shares the profits made from the business with all employees or a designated group of employees. Employees receiving a share of the profits paid out by the employer do not have to pay federal taxes on the money received from the DPSP until it is withdrawn.

BREAKING DOWN 'Deferred Profit Sharing Plan - DPSP'

An employer that chooses to participate in a DPSP with some or all of its employees is referred to as the sponsor of the plan. Employees who are granted a share of the profits are the trustees of the plan. DPSPs are a type of pension.