Individual Pension Plans

Some Basics Facts

If you’re an owner of an incorporated business, an Individual Pension Plan may allow you to gather up to 65% more retirement assets than an RRSP.

What is an Individual Pension Plan ?

An Individual Pension Plan, or IPP, is a defined benefit pension contributed to by your company. The contribution amounts are determined by your age, T4 income and years of service with your company and can be significantly higher than an RRSP contribution. The amounts contributed to an IPP are then used to provide for a set future retirement income (the defined benefit).

Is an IPP right for you ?

If you answer Yes to these questions, keep reading….
     Are you over 38 years old ?
     Is your T4 income from you business over $111,111 in 2007?

Is an IPP right for your business ?
     Is your business incorporated ?
     Is your business experiencing stable or growing profits ?

What are some of the benefits of an IPP?

100% creditor proofing of plan assets.
Ability to create larger retirement asset versus an RRSP due to larger contributions.
IPP contribution is tax deductible expense of corporation therefore no payroll taxes on that amount.
Potential for large, tax deductible lump sum deposit by company in first year for past service.
Retirement benefits are pre-determined.
Pension plan surpluses belong to the member (you).
All costs of the pension plan are tax deductible to the company.
Allows for significant tax deductible contribution at retirement.
(Allows for additional tax deductible deposits from the company if the IPP Rate Of Return is less than 7.5% compounded annually)

How much can my company contribute to an IPP ?
Contributions to an IPP are based on the age of the plan member. Here is a sample of the current(2007) annual IPP contributions for variously aged plan members:

Age Maximum IPP Contribution
    40                     $    24,000
    45                     $    21,900
    50                     $    24,000
    60                     $    29,000

RSP Max $ 19,000

As you can see, contribution amounts can be much higher for an IPP than an RRSP.

How much does an IPP cost?
Costs vary very little from firm to firm, so it’s important to deal with an experienced Actuarial Consultant. Generally speaking Setup costs for an IPP start around $3000 and have annual administration / filing costs that range from about $1500.00 and up. Every three years the actuary is required to prepare a valuation report on your Individual Pension Plan to determine its status. Roughly speaking this is about $3000 or so every 3rd year. These, and all other costs, are tax deductible expenses for your company and a very close to the the payroll expenses saved on income that otherwise would be paid out as salary or bonus to you.

How do I get started and find out more?
Getting started is easy ! Call us at our contact info below or email us at david.johnstone@ipcsecurities.com to request a more detailed report on Individual Pension Plans and a confidential questionnaire for you and your accountant to complete. Fax back the questionnaire to us and well have an actuary who specializes in IPPs prepare a personalized report for you. At the same time, we’ll review you company’s financial position to determine if an IPP is an appropriate strategy for you.

Once we’re satisfied that an IPP makes sense, we’ll meet with you and your accountant to fill in the gaps, obtain more detailed information and engage the actuarial company to begin the set-up your company’s Individual Pension Plan.

Don’t delay !

For more information contact:
David Johnstone
Phone: (519) 376-0095
Fax: (519) 376-2978
E-mail djohnstone@ipcsecurities.com