Individual Pension Plan (IPP)
Maximizing your retirement contributions to a RRSP may not provide sufficient income to meet your retirement needs. A recent RBC poll indicates that as pre-retirees, 41 percent of business owners are concerned that they would not have enough money to live well and do what they want when they retire. An Individual Pension Plan (IPP) may enable you to make higher tax-deductible contributions than the maximum permitted for Registered Retirement Savings Plans (RRSPs) and enhance your retirement income. An IPP is a defined benefit pension plan established by an incorporated company typically for one individual. The IPP may allow you to enhance your retirement income through additional tax efficient contributions. Establishing an IPP can greatly enhance retirement benefits, but it can also be very complex.
Reasons to consider an IPP
● Substantially higher retirement savings compared to an RRSP
● Higher annual contributions than an RRSP for individuals over age 40
● IPP investments grow on a tax-deferred basis
● Assets within an IPP are protected from creditors
● Contributions and IPP-related expenses are tax-deductible for the sponsoring company
● Possible to make contributions for past years of employment
● Additional lump-sum contribution permitted at retirement
● Able to compensate for investment and funding shortfalls through additional contributions
● Several options at retirement
● At death, remaining value goes to surviving spouse or estate
Suitable candidates
● Individuals over the age of 40 who earn a T4 income
● Incorporated business owners and family members
● Incorporated professionals
● Senior executives
● Small businesses with sufficient cash flow to fund the IPP
RBC Dominion Securities’ team of professionals can help – by making it easy to establish an IPP that’s right for you.
