Individual Pension Plan (IPP)

An IPP is a registered pension plan normally established for a single participant, and designated specifically for business owners or key employees. It offers particularly interesting tax benefits, and allows to plan retirement income. The IPP is a sound alternative to a strategy that only seeks to contribute the maximum RRSP amount for retirement purposes.

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What’s an IPP?

An IPP is an individual pension plan. 

The benefits of an IPP

  • Allows for substantially higher contributions than those permitted under an RRSP.
  • Contributions and costs related to an IPP are tax deductible and paid for by the company.
  • At retirement, amounts continue to grow free of taxes if the annuity is paid out of the plan.
  • Possibility to contribute for recognized years of service prior to the establishment of the IPP.
  • Possibility to modify the IPP provisions in order to maximize the benefits for the following situations: indexation of the annuity, early retirement without reduction, and bridging benefit. These changes result in an extra contribution, which is also tax-deductible for the company. 
  • In cases of plan termination, employment termination or retirement, the surplus can belong to the participant, and it is not taxable as long as it is not withdrawn. 
  • Upon retirement, the surplus can provide additional income to the participant. 
  • For residents of British Columbia, Québec and Manitoba, the assets are not locked-in for connected persons. 
  • Transferring amounts to an IPP reduces shareholder equity.