Individual Pension Plan
The IPP, or The Individual Pension Plan is an option that is becoming more popular for many professionals and small business owners that want to take advantage of the larger dollars that can be deposited into a retirement savings vehicle.
However, many professionals and small business owners are taking advantage of this worthwhile retirement strategy.
IPP is different then a Self Directed RRSP
- The IPP can provide protection from personal and corporate creditors. It is a trust created arrangement.
- Contributions to an IPP are graduated by age, as your age goes up, your contributions increase by 7.5% per year. (The RRSP existing maximum is $15,700.)
- The IPP is funded by a Company with a past service contribution, composed of a tax-free roll over of existing RRSP assets plus an additional tax-deductible Company contribution. This contribution can be in the hundreds of thousands of dollars.
- Self Directed RRSP are subject to volatile market conditions. IPP has an ongoing actuarial valuation requirement, which will require additional contributions if the portfolio has under performed those mandated requirements.
- An RRSP does not have rules on diversification. IPP mandates a safety first approach. The portfolio is not permitted to invest more then 10% of its assets in any single investment. However, the 30% foreign content applies to both RRSP and IPP.
- IPP permits additional lump sum payments to the plan by the Company upon retirement to fund early retirement prior to age 65 as well as enhanced indexing.