Save for retirement. Plus save on tax. With LifePlan.
If you’ve hit your RRSP contribution limit and you fit certain criteria, an Individual Pension Plan (IPP) is another way you can save for retirement while saving tax. An IPP is a registered, defined-benefit pension plan that lets you build your retirement income under a tax-sheltering umbrella, and get the maximum pension that Canadian tax law allows.
If you’re a business owner or an executive, an IPP can create additional contribution room over and above an RRSP, once you reach a certain age.
If you own your business, an IPP can save even more tax, because the IPP contributions your business makes, plus any administrative costs, are tax-deductible. To set up an IPP and become a plan sponsor, your company must be incorporated. To be an IPP plan member, you must be an employee or a shareholder of the sponsoring company and earn “T4 income” (salary that’s reported on your annual T4 statement).
An IPP can create a significant tax-planning opportunity for you and your business, both when you first start funding the plan and when you retire through tax-deductible, lump-sum contributions known as “past-service funding” and “terminal funding,” respectively.
To find out whether an IPP would be right for you, and then to set one up, you’ll need to work with your LifePlan financial advisor, who will in turn work with an actuary and help you decide your options.
Our qualified consultants will take the time to review your current investment account and see if your investments holding have the right asset allocation and are managed according to your risk tolerance.