Small Business Individual Pension Plans
What is an Individual Pension Plan (IPP)?
This plan takes into account a member’s salary, age and years of service to calculate a maximum amount of contribution allowable year to year. (Regular RRSP contribution room is determined by salary and allowable rate and dollar limit from government).
Who should consider an Individual Pension Plan?
Individuals over 40 years of age who have an income of $100,000 and more. An Individual Pension Plan is a more effective alternative for the unique retirement planning needs of business owners and senior executives. It is also beneficial for younger individuals, or lower income earners, who have eligible years of past service that they can buy back.
What are the Benefits?
- Family Business Owners have the ability to transfer the Individual Pension Plan asset to the next generation on a tax-sheltered basis
- Provides Business Owner certainty of Retirement Funds
- Retirement income is known in advance, as a defined benefit plan
- Contribution amounts increase with the age of the member, subject to adjustments
- The opportunity to keep the plan operating after age 69, if the plan is paying the retirement benefits
- It maximizes tax-sheltered contributions and benefits for retirement and provides protection of assets
- Income Splitting Opportunity with the lower income spouse
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