What is an Individual Pension Plan (IPP) and who benefits most from an IPP?
People who have a corporation and pay themselves a salary can usually set up an Individual Pension Plan (IPP) to increase their pension savings. Basically, an IPP is a company-sponsored defined benefit pension plan, with a membership of one. Who usually stands to benefit the most from an IPP? In most cases, individuals who are at least in their early 40s and who earn over $100,000 annually. In these circumstances, the maximum IPP contribution is usually higher than the RRSP limit. For the company, IPP contributions are usually tax-deductible. If the owner has run their company for some time, he or she may be able to make a lump sum, catch-up contribution. Theres an expected rate for investment earnings within an IPP, currently 7.5% per year. If actual earnings are less, the company can contribute additional funds to top up the shortfall; this isnt possible with an RRSP. 6. What is an Insured Retirement Plan (IRP)? An Insured Retirement Plan (IRP) usually offers tax-free supplemental in
