Self-Employed Retirement Plan

Requirement for registering a self-employed pension plan

A self-employed person who has attained the age of twenty-three, but has not attained sixty-six years of age and who in a calendar year has pensionable earnings from self-employment exceeding $20,000 shall apply for registration of a self-employment pension plan.

Pensionable earnings means in a calendar year, net earnings from a business, provided that such net earnings are calculated on a consistent basis from year to year using either a cash method or accrual method of accounting. Net earnings means a self-employed person’s revenues less expenses (excluding any wages, salary, leave pay, fee, commission, bonus or payments from a profit-sharing scheme paid to the self-employed person), from operating a business in a calendar year.

Amount of contribution to a self-employment pension plan

A self-employed person shall within 60 days after the end of and in respect of that calendar year, contribute to a registered self-employment pension plan and amount which is the equivalent of two times the amount of the contribution rate as prescribed by the regulations (as of 2004 the contribution rate was 5%). However, a self-employed person shall not, in any one calendar year, be required to contribute an amount which exceeds $5,000. The self-employed person may elect to contribute monthly based on an estimate of the annual net earnings. If during a calendar year, the member contributes an amount in excess of what would have been required had he contributed annually, the excess may be carried forward or applied as a voluntary contribution.

Self-employed persions participating in a Financial Institution Pension Plan or other registered pension plan

If the self-employed person is enrolled in a registered pension plan established for the employees of the self-employed person or for employees of a business carried on by the self-employed person, then they do not have to establish a separate self-employed pension plan. The self-employed person must contribute an amount at a rate not less than that set out above.

Setting up a self-employed pension plan

If it is determined that a self-employed pension plan is required, the individual would contact one of BF&M’s agents or group representatives, who will assist the individual in filling out the required application and documentation for submission to the Pension Commission and the Tax Commission (if required). The investment options available under this plan are the same as those provided under the Golden Accumulator Retirement Plan.