6+ Key Retirement Compensation Arrangement (RCA) Facts

what is retirement compensation arrangement

6+ Key Retirement Compensation Arrangement (RCA) Facts

An agreement structured to provide supplementary retirement benefits beyond those available through registered pension plans is a mechanism often utilized by employers. This mechanism allows companies to offer deferred compensation to select employees, frequently executives or highly compensated individuals. These arrangements are typically funded through a variety of investment vehicles and are subject to specific tax rules distinct from those governing registered plans. For instance, a corporation might establish such an arrangement to supplement a senior executive’s retirement income, recognizing their significant contributions to the organization.

The significance of these arrangements lies in their capacity to attract and retain top talent by providing a competitive benefits package. Such plans can bridge the gap created by limitations on contributions to registered plans, offering a valuable incentive. Historically, these arrangements have evolved to address the needs of both employers seeking to incentivize performance and employees aiming to secure a comfortable retirement. Their adaptability has made them a cornerstone of executive compensation packages.

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