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Individual Pension Plan (IPP): How Business Owners Can Maximize Retirement Savings

Planning for retirement is a crucial aspect of financial management, especially for business owners and professionals. In Canada, Registered Retirement Savings Plans (RRSPs) are popular vehicles for retirement savings, but if you’re a business owner, an Individual Pension Plan (IPPs) might be a better option. While both have advantages and disadvantages, IPPs offer unique benefits that make them particularly attractive for business owners. Keep reading to discover how IPPs can supercharge your retirement savings as a business owner, providing higher contributions, tax advantages, and wealth protection. 

Maximizing Retirement Savings with IPPs

One of the key advantages of an IPP is its higher contribution limit compared to an RRSP. For business owners, this means the opportunity to save significantly more for retirement. Depending on your T4 income and years of service, an IPP allows contributions up to 65% more than you could based on RRSP limits. This increased saving potential can have a significant impact on building a substantial nest egg for retirement. 

Tax Advantages Through Corporate Contributions

With IPPs, business owners can benefit from a unique tax advantage. Instead of drawing a salary and then contributing to an RRSP, contributions to an IPP are made directly by the operating company using corporate funds. Both contributions and IPP-related expenses are tax-deductible for the sponsoring company. This tax efficiency helps maximize retirement savings and reduce the overall tax burden. 

Creditor Protection and Wealth Transfer

Another compelling advantage of IPPs is the level of creditor protection they offer. Contrary to RRSPs, IPP assets enjoy protection from creditors under provincial legislation, providing added security for business owners. Furthermore, IPPs facilitate wealth transfer to the next generation, allowing for a smooth transition of wealth. 

Benefits of RRSPs 

While IPPs offer unique advantages for business owners, RRSPs also have their merits. RRSPs are straightforward to set up and maintain, accessible to anyone, and offer tax-deductible contributions. Additionally, RRSPs allow for tax-advantaged growth of investments until withdrawal, and funds can be used for specific purposes such as buying a home or funding education (if applicable). But they generally are not as powerful as an IPP for business owners. 

Choosing the Right Path for Your Retirement 

When it comes to retirement planning, business owners must carefully assess their financial situation and goals. For high-income business owners looking to maximize retirement savings and enjoy tax advantages, IPPs are a compelling option. The higher contribution limits, flexibility, creditor protection, and wealth transfer benefits make IPPs an attractive choice. However, RRSPs remain a viable option for individuals with different financial circumstances and goals. Feel free to contact us to learn which option might be best for you. 


  • W. Christopher Kovalchuk, MBA
    Chris began his professional career in 2016, as a financial analyst, in the Financial Technology Credit/Lending sector. He earned his MBA, part-time, from Concordia University in 2019. Chris has been a member of Claret since 2018 working in trading & research and recently moved into the role of Associate Portfolio Manager.

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