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When particular person pension plans beat RRSPs

An IPP presents a sturdy various for entrepreneurs and integrated enterprise homeowners

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By Colleen O’Connell-Campbell

Particular person pension plans stand out as a sterling retirement financial savings choice for some demographics of entrepreneurs and integrated enterprise homeowners, notably these with T4 earnings of greater than $100,000 and over the age of 40.

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An IPP presents a sturdy various to the extra frequent registered retirement financial savings plan (RRSP). However what precisely is an IPP, and why is it value a spot within the monetary methods of a seasoned entrepreneur?

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An IPP is a tax-sheltered retirement financial savings plan particularly designed for integrated enterprise homeowners and professionals. You may consider it as a supercharged RRSP, providing larger contribution limits and extra advantages tailor-made to the wants of profitable people who’ve made important strides of their careers.

The first attract of an IPP lies in its enhanced contribution limits, which regularly exceed these of RRSPs. This characteristic turns into more and more invaluable as one grows older, permitting for accelerated retirement financial savings.

Moreover, IPP contributions are tax deductible and should provide creditor safety, including a layer of safety to your hard-earned wealth.

When is an IPP ideally suited?

There are a number of elements that make an IPP interesting to folks in sure conditions:

1. Age and earnings: The IPP is especially advantageous for these older than 40 with a T4 earnings exceeding $100,000. Whereas accessible to youthful people, the advantages develop into extra enticing as one enters this demographic.

2. Integrated professionals: These in fields similar to regulation, drugs and accounting, the place incorporation is frequent, discover IPPs particularly helpful.

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3. Household enterprise and wealth switch: For family-owned companies, IPPs could be instrumental in intergenerational wealth switch, guaranteeing the continuity of economic safety.

4. Exit methods: IPPs is usually a key aspect in a cash-rich enterprise exit technique, complementing different property similar to proceeds from enterprise gross sales, actual property portfolios and company investments.


Whereas each IPPs and RRSPs provide tax-deferred progress, IPPs stand out in a number of methods:

1. Increased contribution limits: IPPs enable for larger employer contributions in comparison with RRSPs, making them ideally suited for high-income earners trying to maximize their retirement financial savings.

2. Outlined advantages: Not like RRSPs, IPPs present an outlined profit after retirement, providing a predictable earnings stream.

3. Tax effectivity for companies: Contributions to an IPP are tax deductible for the company, enhancing the general tax effectivity of the enterprise.

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Establishing an IPP includes navigating legalities and particular necessities, making it important to hunt skilled recommendation. This complexity, nevertheless, shouldn’t deter savvy buyers and entrepreneurs from exploring IPPs as a viable choice.

And for individuals who keep in mind the band Naughty by Nature’s 1991 hit O.P.P., an IPP may simply be the brand new catchphrase for forward-thinking enterprise homeowners as we head deeper into tax season. Permit the catchy tune to underscore the IPP’s relevance to a gen X (and older) cohort of entrepreneurs and professionals.

Colleen O’Connell-Campbell is a wealth adviser with RBC Dominion Securities and host of The Money-Wealthy Exit Podcast.

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