Individual Pension Plan (IPP)

Who is an IPP right for?

Who is the ideal candidate?

• Incorporated professional or business owner with,
• T4 earnings of approximately $100,000 or defined benefit limit (i.e. for 2008 $116,667),
• 40 years of age or older

In addition the IPP is best suited to business owners who have well-established businesses that generate consistent profits annually.

Why you should consider an Individual Pension Plan (IPP)?

• Further tax sheltering in excess of RRSP contributions
• Additional tax deductible lump sum contribution at retirement on sale of assets of the company or sale of the company itself
• More prudent investment rules and limitations than RRSP’s
• Full creditor protection
• Pre-planned retirement income
• Succession planning within a family business
• No payroll tax levied on IPP contributions (depends on province)
• All costs associated with the pension plan are tax deductible to the company

What you need to know about IPPs before investing.

• Assets are locked-in and may, in most circumstances, only be withdrawn during retirement
• There is little contribution flexibility – in most circumstances the plan must be funded each year
• IPP affects your client’s RRSP room in the year of setup and subsequent years. In most cases RRSP room is reduced to $600 per annum. To avoid penalties do not contribute to your RRSPs in the year you setup an IPP.