Dramatically boost your retirement assets with corporate contributions.
How an Individual Pension Plan (IPP) Works
An IPP is a tax-deferred savings vehicle used to invest and save for retirement. Contributions are tax-deductible and made directly from the corporation. Similar to an RRSP, the assets inside an IPP are tax-deferred until withdrawn, at which time they are treated as income.
How much can be contributed to an Individual Pension Plan?
| Age | RRSP Contribution | IPP Contribution | IPP Advantage | |
| 45 | $30,780 | $33,200 | $ 2,420 | 8% |
| 50 | $30,780 | $36,400 | $ 5,620 | 18% |
| 55 | $30,780 | $40,000 | $ 9,220 | 30% |
| 60 | $30,780 | $43,900 | $13,120 | 43% |
| 65 | $30,780 | $48,300 | $17,520 | 57% |
Who is a good candidate for an Individual Pension Plan?
- Business owner
- Registered professional
- Middle aged adult (40+)
- T4 Earnings of $100K+
- An IPP can be established for someone with lower earnings
Case Study
A business owner, aged 55, incorporated for 24 years, maximum T4 earnings of $178,600 with a current RRSP balance of $291,866.
- $156,600 in immediate past service funding,
tax-deductible to the company - $221,700 in qualifying transfer (from existing RRSP balance)
- Up to $446,211 more in tax-deductible contribution room over working years (excluding past service)
- The IPP balance could be up to $1,306,700
more than the RRSP balance
All the above figures are based on 2022 prescribed assumptions.
Advantages of an Individual Pension Plan
- Increased tax-deductible contribution room – up to 65% more than an RRSP
- Can reduce passive income in corporation
- Tax-deductible company contributions for prior years (past service)
- Richest benefit plan in Canada – 2% defined benefit pension plan
- All costs are tax-deductible to the company
- Creditor protection
- Increased corporate and personal tax savings
- Can include employed family members and pass on wealth to the next generation
Contact Ford Keast Wealth Management to Learn More About an Individual Pension Plan (IPP)
Let Ford Keast Wealth Management help determine if an Individual Pension Plan (IPP) is right for you and your business, starting with a financial plan. We will work with your Accountant to help determine how well your retirement is funded and where your business is projected. With this knowledge, you can determine how an IPP may fit into your retirement plan. If you have any questions on this topic, contact Gareth Whiteside at Ford Keast Wealth Management at 519-679-9829 or email gwhiteside@fkwm.ca.
