An IPP can be a very powerful and flexible, retirement savings tool for owner managers, especially those who are close to retirement with inadequate savings.  The IPP allows the use of pre-tax corporate income to help catch-up retirement savings. IPPs are customized to provide better retirement funding than RRSPs. In fact, IPP contribution room calculations include age as a factor. As a result, IPP contribution rooms rise with age, allowing employers to contribute more tax-deductible benefits. Consequently, these higher contributions allow for higher accumulation of compounding tax-deferred benefits for an IPP member.

• Higher contribution room than RRSP and increases with age
• Sizable contribution opportunity for past service years upon implementation
• Tax-deductible employer contributions and administration expenses
• Additional funding room available to replenish shortfalls
• Additional tax-deductible contributions can be made available at retirement
• Income splitting at age 50 and Spouse’s survivor pension included
• Estate and succession planning opportunities
• Customizable tax sheltering strategies
• Post-retirement cost of living adjustment factored in
• Better creditor proofing

• RRSP transfer may be required to fund past service
• Only one set of registered retirement savings limit – either IPP or RRSP but not both
• No access to funds while employed and a member of the plan
• For plans that require to be federally or provincially regulated, there are minimum contribution requirements to the company
• Plan assets must be used to provide pension. As such, the benefits are locked-in.
• If assets are doing well and an excess actuarial surplus exists, this may affect the company’s ability to make contributions.
• Higher investment standards exist for IPPs. These are to ensure quality and diversification of the plan assets.

An IPP is typically feasible and certainly worth considering for business owners, incorporated professionals, key executives and key employees that are highly compensated. Some additional questions for all individuals to consider include:

• Is the Employee at least age 40?
• Does a bona-fide Employer-Employee relationship exist?
• Does the Employee receive T4 income?
• Does the Employee want registered retirement savings that exceed RRSP and other registered plan limits?
• Does the Employer want larger deductions than an RRSP can provide?

We would be happy to discuss the suitability of an IPP for your corporate and retirement needs. Please reach out to us in the Get Started section below and/or request a complimentary plan funding quote.