Part 1 of a 6 Part Series

Creating Certainty of Income with an

INDIVIDIUAL PENSION PLAN (IPP)

Gregory Dobson, CMA, CFP

Everyone knows the benefits of using a Registered Retirement Savings Plan (RRSP).  Few principal shareholders of privately owned, active Canadian corporations realize that they can significantly increase their retirement plans through an IPP.

That means:

• Up to 60% more assets may be contributed to an IPP
• Make up for Past Contributions
• Assured annual valuation interest rates        

If you are age 45 or older and have a salary in excess of $100,000, either as a shareholder or an employee of a privately held Canadian corporation, this program is of interest to you.

An IPP is similar to a Registered Defined Benefit Plan in that it targets the level of pension income that will be provided at retirement. 

Other benefits:

• The funds in the plan are immediately vested and are fully creditor proofed
• Contributions made to the plan by the corporation are entirely tax deductible
• Contributions by the corporation are not included as income in determining whether you are personally subject to minimum tax
• Your investments are self-administered.  They can be invested with the same ease as a self-directed RRSP
• Adverse investment returns can be compensated for with additional contributions as determined by an actuary.

In the coming months I will discuss the features and benefits of an IPP.