What must Rita do if she wishes to transfer her share from the DPSP fund without incurring taxes?

If Rita wishes to transfer her share from the Deferred Profit Sharing Plan (DPSP) fund without incurring taxes, the correct action is to transfer it directly to a Registered Retirement Savings Plan (RRSP). This option is beneficial because such a transfer allows for tax-deferred growth, meaning that the amount transferred does not trigger any immediate tax consequences. The funds will remain sheltered from taxation until they are withdrawn from the RRSP, typically at retirement when her income may be lower.

When transferring funds from a DPSP to an RRSP, this transaction is known as a "direct transfer" and is designed to preserve the tax-advantaged status of the funds. Tax regulations specifically allow for this type of transfer without incurring taxes at the time of the transaction, which is a significant consideration for long-term financial planning and retirement savings.

In contrast, receiving the amount in cash would result in immediate taxation on the amount withdrawn, making this option unfavourable for someone looking to avoid tax implications. Transferring the funds to a Tax-Free Savings Account (TFSA) is also not allowable for a direct transfer, as it does not accept such transfers from a DPSP. Investment in stocks does not address the issue of the transfer and could also lead