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The potential drawbacks and risks of a DPSP

A deferred profit sharing plan (DPSP) is a type of retirement savings plan that is offered by some employers to their employees.

While a DPSP can be a useful way to save for retirement, there are also potential drawbacks and risks to consider.

One potential drawback of a DPSP is that the employer has complete control over the plan and can make changes or terminate it at any time.

This means that you may not have as much control over your retirement savings as you would with other types of retirement plans, such as a RSP or Tax Free Savings TFSA.

Another risk of a DPSP is that it is tied to the financial performance of the company. If the company does poorly, the contributions to the plan may be reduced or eliminated.

This can have a significant impact on your retirement savings and may not be an ideal option for those who are concerned about the stability of their employer.

Another potential risk is that you may be subject to vesting requirements with a DPSP. This means that you may not be able to access the funds in the plan until you have been with the company for a certain number of years.

If you leave the company before you are fully vested, you may lose some or all of the funds in the plan.

It's important to carefully consider the potential drawbacks and risks of a DPSP before enrolling in one.

It may be a good idea to speak with a financial advisor or tax professional to help you understand the potential benefits and drawbacks of a DPSP and determine if it is a good fit for your financial situation.


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