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Individual Pension Plan:
An alternate solution for business owners and executives

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What is an IPP?
An IPP is a registered defined benefit pension plan sponsored and funded by an employer. It is designed for the professional looking to maximize contribtuions towards their retirement.


Many business owners and executives consistently maximize their RRSP contributions. However, they may find that their personal RRSP limit will not be sufficient to fund their desired lifestyle through retirement.


How will the company benefit?

Many incorporated businesses that are looking to add a benefit for their owners and top executives may want to consider an IPP.


As the plan sponsor, the company would benefit from annual contributions, setup fees, and maintenance fees – all of which are fully tax-deductible to the corporation and non-taxable to the employee until the money is withdrawn at retirement.


This would allow the company to reduce their annual retained earnings while growing the employee’s retirement savings – at a significantly higher rate than with an RRSP.



Advantages of an IPP

  • Higher deductible contribution limits than RRSPs
    Maximum funding available
    Contribution limits increase with age
    Contributions and expenses are tax-deductible to the corporation
    Greater certainty over retirement income if the plan is properly funded
    Optional past-service contribution
    Opportunity to make lump-sum contribution at time of actual retirement or business exit
    Ability to top-up plan for under-performance
    Assets are creditor-protected


Disadvantages of an IPP

  • No access to funds while employed and a member of the plan
    Plan assets must be used to provide pension, so benefits are locked in
    Higher administration expenses and more legislation
    Excess surplus may reduce future contributions


Who is an ideal candidate?

  • Key executive of a private or public company
    Professional with a professional corporation
    T4 earnings greater than $120,000 annually
    $100,000 or greater in RRSPs


How does an IPP work?
Contributions are made up of three components:

  • Past Service

    Qualifying Transfer from RRSP

    Current Service


    Actuarial valuations are done on a triennial basis to calculate annual contributions going forward.

    The Value of Probate Bypass
    Example: A $100,000 investment can attract over $5,000 in probate and legal fees when you die. How can you easily avoid this expense?



    individual pension plan



    How is an IPP set up?
    The first step in establishing an IPP is to authorize the actuaries to create the documentation for
    the new plan and complete an initial valuation report.

    • In order to do this, they will request copies of actual T4 tax slips, RRSP statements and your
    last Notice of Assessment showing unused RRSP contribution room.

    • Once the plan is registered with CRA, an investment account will be opened and the current
    service and past service amounts will be deposited. The member’s RRSP will be transferred to the
    new IPP account.

    • Going forward, annual contributions can be made up to 120 days after your corporate year-end

    Ongoing Administration

    Actuarial valuations are performed every three years. These valuations reveal any plan deficiency or surplus so that adjustments can be made to future corporate contributions.



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About Ciccone/Mckay

Ciccone/McKay Financial Group is an independent financial services firm with over 75 years of combined experience in the areas of risk management, wealth management and employee benefits.


We specialize in providing insurance and investment solutions for our clients, helping businesses, individuals and families grow, manage, protect and transfer their wealth.

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  • Ciccone/McKay Financial Group
    Suite 360 - 1095 West Pender Street
    Vancouver, British Columbia
    V6E 2M6