Unlocking Retirement Potential
The Strategic Advantages of Individual Pension Plans
Did you know business owners and incorporated professionals can create their own pension? Individual Pension Plans (IPP) remain one of Canada’s best-kept retirement planning secrets. An IPP can be a powerful, tax-efficient solution that offers higher registered contribution limits, enhanced corporate tax deductions, and unique opportunities to move assets out of the corporate structure. While pension plans can add complexity to retirement planning, this summary outlines the key benefits of IPPs and highlights who may be best suited to take advantage of this robust planning tool.
Who is an IPP Best For?
An IPP can support incorporated professionals or business owners over age 40 who want to build retirement savings in a tax-efficient manner. Common users of IPPs include physicians, dentists, engineers, accountants, and lawyers. It can be beneficial for high-income earners seeking larger contribution limits than those available through a Registered Retirement Savings Plan (RRSP). To qualify, individuals must receive T4 employment income (salary) from their corporation. In our view, IPPs can also be valuable in multigenerational family businesses looking to transfer wealth tax-efficiently across generations.
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