1. Significant Tax Savings for Your Corporation
An IPP is a powerful tool for reducing corporate taxes. All contributions made to the plan, including current and past service costs, are fully tax-deductible. This allows your corporation to lower its taxable income while building a pension for your retirement, making it a highly efficient way to manage corporate funds.
2. Superior Retirement Savings Compared to RRSPs
An IPP allows for much higher contribution limits than an RRSP, especially as you age. These contributions increase significantly once you hit 40, giving business owners and incorporated professionals the ability to accelerate their retirement savings and accumulate more wealth compared to an RRSP.
3. Built-In Creditor Protection
IPPs provide strong creditor protection, as the assets in the plan are held in trust and are not included in the corporation’s balance sheet. This ensures that your retirement funds are shielded from creditors, offering peace of mind in the event of financial difficulties or lawsuits.
4. Customizable Pension Benefits
IPPs offer greater flexibility in how pension benefits are structured. You can adjust the plan to include provisions for inflation indexing or early retirement bridge benefits, allowing you to tailor the pension to meet your specific retirement goals. This degree of customization makes an IPP more adaptable than other retirement savings plans.
5. Long-Term Wealth Building Through Terminal Funding
IPPs offer the opportunity for terminal funding, which allows you to make large contributions to top up your pension as you approach retirement. This can include additional contributions for inflation protection or to ensure a smooth transition into retirement. These final contributions can be significant, often amounting to seven figures, providing a major boost to your retirement savings【4†source】.
To learn more about how an IPP could benefit your retirement, watch this video.
