What is an IPP? An Individual Pension Plan is a retirement savings vehicle for business owners.
There are actuarial reports completed annually on these types of plans to ensure the investment portfolio will be able to generate an income in retirement years. The benefit is an annual amount to be received as an income. It is an “RSP on steroids”.
The structure of this pension plan allows the business owner have this contingency plan there for retirement. There is also the benefit of the tax savings when contributing to the plan from your business.
An Individual Pension Plan (IPP) is creditor-proof. An owner of a corporation qualifies to have an IPP. There are costs for the administration of the IPP (set-up and valuation). The valuations are done by a third party, an actuarial company. A beneficiary is named on the plan. There is a formula that takes into consideration your existing RSP and past service.