An Individual Pension Plan (IPP) is a robust tax-sheltered retirement savings vehicle tailored for business owners, incorporated professionals, and highly compensated employees in Canada. Sponsored by a corporation, an IPP takes full advantage of the defined benefit limits set out in Canada’s Income Tax Act, providing key advantages such as the following.
Enhanced retirement savings. For the right candidate, yearly contribution room can be 30-50% higher than the funding room generated by an RRSP.
Age-dependent contribution increases. As members age, the plan accommodates higher increases in contribution room, allowing for an alignment of retirement savings with the individual’s evolving financial circumstances..
Tax-deferred wealth transfer. For business owners, this is a tax-efficient way to facilitate the transfer of substantial sums from a corporation to personal ownership.
Fully deductible. Contributions into an IPP and IPP-related fees are a deductible expense for the sponsoring company.
Additional funding opportunities available. Opportunities for top-up contributions are available at retirement, in an environment where assets significantly underperform, or in select other special circumstances such as marriage breakdown.
