Pension Plan
Pension Plans
An individual pension plan
(IPP) is an income planning tool that helps you save money for retirement. This is a registered, tax-sheltered, defined benefit plan.
Small companies, business owners, and incorporated professionals can benefit from an IPP. All you need to get started is a business that is incorporated. Employees and shareholders that earn T4 income can become plan members.
An IPP has many benefits for businesses and employees.
- Tax-deductible contributions and administrative costs,
- Tax-deferred growth,
- Annual contribution limits that increase with age,
- Lump-sum contributions for past service that are also tax-deductible,
- Pension plan surpluses allocated to plan members,
- Access to plan benefits as early as age 50 or as late as age 71, and
- Terminal funding upon retirement that allows additional tax-deductible contributions in the year you retire.
An IPP is worth considering if you
- Do not have access to another pension plan,
- Are a business owner and want your incorporated company to make large tax-deductible contributions,
- Are a high income earner,
- Have been employed with the same business for more than a decade, or
- Want more contribution room than a traditional RRSP can provide.
Here's what you need to know to get started.
IPPs are regulated by the Canada Revenue Agency and are also affected by provincial pension plan laws and regulations. When it is time to retire, plan members can receive a regular pension payment, purchase an annuity, or transfer their IPP to a registered product.
An individual pension plan can be a great tool for employee recruitment and retention while also providing significant tax savings. It is important that the plan is set up in accordance with all relevant laws and regulations. If you are considering an IPP for yourself or your business, please get in touch with us. During a free, no-obligation consultation
we will help you determine if this is the right plan for you.