What is an Individual Pension Plan?
An Individual Pension Plan (IPP) is a defined benefit corporate pension plan for individual business owners and incorporated professionals. An IPP typically has only one or two members, the business owner and possibly his or her spouse. Think of an IPP as a super-charged RRSP for which the corporation can make higher tax deductible contributions to the owner's pension.
It works like this: The corporation, as the plan sponsor, makes annual contributions to an IPP established for the business owner. These contributions can be significantly higher than RRSP contributions and are fully tax deductible to the corporation. The contributions compound tax free within the IPP, just as RRSP contributions do currently. Upon retirement, the IPP provides the plan holder, with a 'defined benefit' pension. That is to say, a steady stream of income that is 'defined' according to the plan.
Unlike an RRSP, the annual contribution levels for an IPP are unique and increase with age, earnings and length of service with the company. So the older a business owner is, the longer the business has been incorporated, the greater the advantages: more capital can be put away, more tax savings and, ultimately, more wealth built over time.
FREE IPP EVALUATIONHow much could you save for retirement? Click here for a no cost, no obligation assessment.
» More
Financial Post ArticlePension plan a way to ease RRSP losses in 2008. Some other options to consider.
» More
January 31, 2011RRSPs vs. IPPs
A look at the similarities and differences between these two retirement savings plans.» More
August 14, 2010Globe & Mail Article
Doctor needs estate-planning prescription by Andrew Allentuck» More
October 26, 2009Retirement advantage: Company-funded plan beats RRSP on savings, Financial Post Article by Rick Spence.
» More
