Individual Pension Plan (IPP)

Individual Pension Plan

Dramatically boost your retirement assets with tax-deductible corporate contributions.

How an Individual Pension Plan (IPP) works

An IPP is a tax-deferred savings vehicle used to invest and save for retirement. Contributions are tax-deductible and made directly from the corporation. Similar to an RRSP, the assets inside an IPP are tax-deferred until withdrawn, at which time they are treated as income.

How much can be contributed to an Individual Pension Plan?

AgeRRSP ContributionIPP ContributionIPP Advantage
45$30,780$33,200$ 2,420  8%
50$30,780$36,400$ 5,62018%
55$30,780$40,000$ 9,22030%

Who is a good candidate for an Individual Pension Plan?

  • Business owner
  • Registered professional
  • Middle aged adult (40+)
  • T4 Earnings of $100K+
    • An IPP can be established for someone with lower earnings

Case Study

A business owner, aged 55, incorporated for 24 years, maximum T4 earnings of $178,600 with a current RRSP balance of $291,866.

  • $156,600 in immediate past service funding,
    tax-deductible to the company
  • $221,700 in qualifying transfer (from existing RRSP balance)
  • Up to $446,211 more in tax-deductible contribution room over working years (excluding past service)
  • The IPP balance could be up to $1,306,700
    more than the RRSP balance

All the above figures are based on 2022 prescribed assumptions.

Advantages of an Individual Pension Plan

  • Increased tax-deductible contribution room – up to 65% more than an RRSP
  • Can reduce passive income in corporation
  • Tax-deductible company contributions for prior years (past service)
  • Richest benefit plan in Canada – 2% defined benefit pension plan
  • All costs are tax-deductible to the company
  • Creditor protection
  • Increased corporate and personal tax savings
  • Can include employed family members and pass on wealth to the next generation


Questions? Concerns?

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