Retirement probably feels further away than it actually is. We want our business owner clients to feel confident about the next chapter. An Individual Pension Plan, the business owners’ defined benefit pension plan, is something to consider.
IPPs are specifically designed for incorporated professionals and incorporated business owners and provide significant tax advantages while also enhancing retirement benefits. IPPs set out to provide the maximum benefits permitted under the Income Tax Act. This means higher tax-deductible contributions are allowed, factoring for age and income. Business owners in their 40s should consider how an IPP could be a part of their retirement planning.
Who should consider an IPP?
If you are a business owner who holds 10 per cent or more shares in a business, are 40 years of age or older and earn a salary of at least $100,000 per year, an IPP may be right for you.
Reasons to consider an IPP:
- Increase your retirement savings versus an RRSP
- For individuals over 40 years of age, your annual contributions are higher than in an RRSP
- Investments within an IPP grow on a tax-deferred basis
- Creditor protection
- All costs are tax deductible to the company
- You are eligible for past service contributions, allowing you to potentially catch up on retirement savings if you started late or have significant past service with the company
- There are several options available at retirement, such as drawing a pension, transferring the funds to a LIRA (Locked-In Retirement Account) or purchasing an annuity
- At death, the remaining value goes to your surviving spouse or estate
To determine if an IPP makes sense for you, consult with your investment advisor and tax professional about your retirement planning strategy.
To learn more about IPPs and to have a personalized IPP illustration created for you, please contact Cielo Orellana, client relationship representative at Cardinal. Cielo iscommitted to helping individuals and families navigate the complexities of financial planning with clarity, compassion and confidence.
With more than 20 years of experience in the financial services industry, she has built lasting relationships based on trust and a personalized approach to each client’s unique goals. Whether guiding families through major life transitions, planning for retirement or building a legacy for future generations, Cielo focuses on delivering thoughtful, customized strategies that prioritize long-term well-being.
Cielo can be reached at 204-290-5370 or corellana@cardinal.ca
