We shop around up to 30 insurance companies to bring the lowest quote for you...GUARANTEED!

Business Insurance >> Business Owner Pension Plan

Individual Pension Plans (IPPs) are increasingly popul ar, especially amongst business owners (including incorporated professionals) who own the corporations that employ them. This is no doubt because as tax- advantaged retirement savings vehicles, IPPs can often provide significant advantages over RRSPs.

IPPs are registered pension plans (RPPs) that are su bject to the requirements of both the Income Tax Act (ITA) and pension standards legislation. IPPs are typi cally defined benefit (DB) arrangements, although it is increasingly popular to have an additional defined c ontribution (DC) component,

or perhaps at earlier ages to implement them on a DC basis. Where the IPP is set up on a DB basis, it typically provides the maximum benefits that such a plan may offer. This drives up funding costs. Business owners find IPPs attractive because they provide enhanced retirement benefits on a tax-deductible basis to their corporation. While DB RPPs are more complex to administer than DC arrangements, many actuarial consulting firms see the IPP market as having considerable grow th and have thus developed standardized packages allowing for the establishment and on-going admini stration of these arrangem ents on a cost-effective basis.

Prior to 1991, it was very difficult for business owners to establish IPPs. When the ITA was amended to permit these arrangements, very specific rules were introduced for “connected” persons (in general terms, persons holding 10% or more of any class of shares on a direct or indirect basis, or persons who do not deal with the employer at arm’s length, or persons who are “specified shareholders”).

.Advantages Offered by IPPs

• IPPs offer the following advantages:

• IPPs can provide the “richest” pension benefits that the ITA permits a RPP to provide, thus

• providing the member with enhanced retirement income

• A source of income qualifying for pension splitting

• Potential larger annual tax-deductible contributions than would be permitted to an RRSP

• Ability to make tax-deductible contributions for past-service

• Additional contributions available at retirement (terminal funding)

• Deductibility of interest charges where employer makes contribution with borrowed funds

• Deductibility of administration and other costs

• Ability to make additional tax-deductible contributions to the IPP if investment performance is poor

• Creditor protection

• Ability for member to own any surplus that may arise under the IPP

• Possible savings in payroll taxes

• Helping to preserve access to the $750,000 capital gains exemption


Get Free Quotes >>
  • Subscribe to Newsletter to stay update
    Name *
    Email *
     
  • Insurance Videos
  • Our Insurance Carriers
Request a Call
Contact First Name:
Contact Last Name:
Email Address:
( ) - -
Best time to reach you:
Things to discuss:
   
 
Ask An Expert
 
Your Question:
How would you like to be contacted:
Contact First Name:
Contact Last Name:
Email Address:
( ) - -
Best time to reach you:
 
Set Your Phone or Email Reminder To Avoid Delays Or Misses
Reminder Date :
How would you like to be reminded:
Contact First Name:
Contact Last Name:
Email Address:
( ) - -
Best time to reach you:
 
Overhead Expense Calculator
Enter average monthly expenses incurred in the opration of office
1. (A) Rent or $
  (B) Property Taxes and mortagage interest payments plus depreciation or principal payments $
2. Office Maintenance $
3. Public utilites(heat,water,electricity) $
4. Telephone,Postage,Paging,Fax and answering service $
5. Employee salary and benefits (except as below) $
6. Management company fee (excluding family owned firm) $
7. Accouting Service $
8. Professional Association Membership fees $
9. Property and liability insurance premiums $
10. (A) Leased equipment or $
  (B) Iinterest plus depreciation or scheduled principal payments for equipment $
11. Interest plus principal payments for business loan from a financial institution to purchase business $
12. Other fixed expenses (normal and customary) $
  Total $0
  Do not include expenses for :  
1. The purpose of acquiring goods for sale,supplies or addtion to inventory  
2. Salaries,fees,drawing account or renumeration for: the proposed insured,any member of the proposed insured's profession or related profession,any person sharing the expenses of the proposed insured  
3. travel and / or entertainment