What is an Individual Pension Plan (IPP)?
An IPP is a one-person maximum Defined Benefit Pension Plan (DB Plan) which allows the plan member to accrue retirement income on a tax-deferred basis. As such, an IPP must conform to the Income Tax Act (ITA) and its regulations (ITR) as well as the requirements of the Canada Revenue Agency (CRA) with respect to defined benefit pension plans. Some of these rules and regulations are: a) The plan sponsor is an incorporated, active company; b) The plan member is an employee of the corporation who earns T4 (or T4A or T4PS) income from the corporation; c) The pension plan document indicates a formula defining the amount of benefit to be earned by the plan member; d) Plan Investments must follow strict guidelines; e) Plan sponsor contributions, as certified by an actuary, are deductible from corporate income; and f) Benefits paid out of the IPP are taxed upon receipt.
An IPP is a one-person maximum Defined Benefit Pension Plan (DB Plan) which allows the plan member to accrue retirement income on a tax-deferred basis. As such, an IPP must conform to the Income Tax Act (ITA) and its regulations (ITR) as well as the requirements of the Canada Revenue Agency (CRA) with respect to defined benefit pension plans.
An Individual Pension Plan (IPP) is a registered defined benefit plan for single participants. It provides all the benefits permitted under the Income Tax Act of Canada in order to maximize tax-sheltered retirement savings. Defined benefit pension plans permit larger tax-sheltered contributions for highly remunerated employees than a registered retirement savings plan (RRSP).
