Canadian Western Trust

Retirement Compensation Arrangements (RCA)

A great addition to the compensation mix for senior employees

Employers looking for an additional way to compensate executives and top talent at levels above the RRSP and pension plans see RCAs as an attractive alternative. They can be a great addition to the overall compensation strategy.

Retirement compensation arrangements (RCAs) are made between an employer and a custodian. The employer makes contributions to the custodian in connection with benefits paid to their employee. These are paid out to the employee on, after or during retirement (or loss of office). 

The contributions made to an RCA are subject to a 50% refundable tax, including 100% of capital gains, earned within the RCA. As an employer, you can also fully deduct the contributions in the year of contribution, with no taxable benefit accruing to the employee. This 50% refundable tax credit, with no interest paid by Canada Revenue Agency (CRA), is repaid to the employer at a rate of 50% of the benefits paid from the trust.


We provides trustee and custodian services for RCAs that include:

  • Preparing and executing trust agreements
  • Overall safekeeping of plan assets
  • Accepting contributions
  • Processing benefit payments and remitting refundable tax amounts to CRA
  • Settling all purchase and/or redemptions of pooled and/or mutual funds and securities
  • Processing dividends and interest payments
  • Issuing Canada Revenue Agency (CRA) tax forms and preparing/filing the annual T3RCA tax return and other CRA summaries
  • Preparing activity statements for the plan-owner and the employer

Fees for RCAs are determined in accordance with the responsibilities outlined in the specific plans.

For more information, contact us.


Find out how RCAs can add to an executive's compensation