Higher Contribution Limits
Defined benefit funding is based on your promised pension and actuarial calculations. Particularly at older ages, this may create more tax-sheltered contribution capacity than an RRSP.
Individual Pension Plans · OnPoint
Turn Your Corporate Profits Into a Tax-Sheltered Retirement Fund
Potentially worth hundreds of thousands more than an RRSP.
An Individual Pension Plan (IPP) can let incorporated business owners and high-income professionals make larger, tax-deductible company contributions than an RRSP allows — building retirement capital while reducing the company’s taxable income.
CRA-registered pension plans · Actuarial calculations · Often suited to business owners age 40+
Benefits depend on your salary, service history, plan design, and applicable tax and pension rules. No investment outcome or creditor protection is guaranteed.
Once you turn 40, the math may change in your favour. An IPP’s permitted funding can exceed RRSP limits as you get older. A personalised projection helps you assess the opportunity — and the costs — before another year passes.
What is an IPP?
A Defined Benefit Pension Plan — Built for You
An IPP is a registered pension plan typically designed for an incorporated business owner, sometimes with an eligible spouse. Unlike an RRSP, your company funds the plan. Eligible contributions are generally a deductible business expense, rather than a taxable benefit to you at the time of contribution.
Past Service Buyback
Recognize eligible years you’ve already worked for your corporation. A buyback can increase your pension and allow a substantial company contribution, with an RRSP transfer potentially required.
A Funding Plan for Downturns
If investment performance falls short of the funding assumptions, additional deductible company contributions may be permitted or required. This is a funding mechanism, not protection from investment losses.
An IPP also comes with actuarial, setup, investment and administration costs, funding responsibilities, and restrictions on access. These should be included in your comparison.
Is an IPP right for you?
You’re a Strong Candidate If You Check These Boxes
IPPs can be particularly effective for incorporated, high-earning business owners. Being a significant shareholder is not the only factor; your salary and service history matter.
Your company is an incorporated, active, and financially healthy business
You’re 40 or older — an age where an IPP may offer a greater funding advantage
You receive T4 employment income from your corporation
You’ve had several years of service with your company
You want to reduce your company’s taxable income
You want to build retirement savings outside your corporation, tax-efficiently
You have little or no unused RRSP contribution room
Not sure if you qualify? Eligibility and funding depend on your age, salary history, years of service, and plan rules. Start with a free initial review and personalised projection.
IPP vs. RRSP · Supplied illustration
See the Difference $742,700 Could Make by Retirement
In the supplied example, an owner begins an IPP at age 55, buys back 20 years of service, and retires at 65. It uses an assumed 7.5% annual return — an illustration, not a guaranteed return or a universally prescribed rate.
RRSP only at age 65
$1,059,900
IPP at age 65
$1,802,600
Additional retirement capital
+$742,700
Illustrated annual pension
$123,900
A separate supplied scenario describes a 50-year-old owner earning $125,000 a year, with eight years of past service, and an illustrated additional $564,000 in retirement savings compared with an RRSP alone.
These are supplied illustrative figures, not independently verified projections or verified client outcomes. Results depend on compensation and service history, investment experience, fees, funding assumptions and applicable rules. The difference above is calculated from the two supplied balances. A personalised actuarial projection may differ materially.
An illustrative buyback example
How a Buyback Could Unlock $140,000 in Company Contributions
The supplied scenario describes a 54-year-old incorporated business owner with 15 years of service and consistently high T4 earnings. An IPP past-service buyback combines an existing RRSP transfer with new employer funding.
The company moves corporate profit into a pension-plan asset, with eligible employer contributions reducing taxable income. The available deduction and any creditor protection depend on the applicable rules.
Illustrative supplied scenario; not a verified client case study.
Total past service buyback
$357,300
Transferred from existing RRSP
$217,300
Net new company contribution
$140,000
New year-one funding, including current service
$168,300
How it works
From First Conversation to Funded Plan — In 4 Steps
01
Eligibility & Projection
Review your age, salary history, years of service, and existing RRSP room to assess suitability and potential funding.
02
Actuarial Calculation
A qualified actuary calculates required funding, including any past-service buyback and the split between RRSP transfers and employer contributions.
03
Plan Registration
Register the plan with the CRA and the provincial pension regulator where required. In Ontario, the current regulator is FSRA.
04
Ongoing Funding & Review
Your company funds the plan under applicable rules. Periodic actuarial valuations and annual administration keep funding and compliance under review.
Frequently asked questions
Your IPP Questions, Answered
General
What is an IPP?
An Individual Pension Plan is a defined benefit registered pension plan, typically established for an incorporated business owner. The employer funds the pension according to the plan’s actuarial calculations and applicable rules.
How is an IPP different from an RRSP?
An IPP is funded by your company and may allow higher contributions, particularly at older ages. Eligible company contributions may be deductible, and the plan can recognise eligible past service. Unlike an RRSP, it requires actuarial work and ongoing administration.
Qualifying & setting up
Who is a good candidate for an IPP?
An owner of an incorporated, financially healthy business, often age 40 or older, with consistent T4 earnings and several years of service. Age 40 is a planning guideline, not a universal eligibility threshold; an actuary must assess your circumstances.
Can my spouse join the plan?
A spouse who works for the corporation may be eligible under the plan’s rules. Eligibility, benefits, and administration costs depend on the plan design and applicable tax and pension requirements.
What’s the deadline to make a tax-deductible contribution?
Employer contributions may be deductible in the year paid or, subject to CRA requirements and other applicable conditions, when paid within 120 days after the employer’s taxation year-end. Confirm the deduction and funding deadlines with your tax advisor and actuary.
Contributions & funding
What happens if my company can’t contribute one year?
Funding obligations depend on the jurisdiction, plan design, and actuarial valuation. Some individual plans may qualify for exemptions or flexibility. Ask your actuary about the specific requirements before reducing or deferring contributions.
Can I still contribute to my RRSP once I have an IPP?
An IPP affects your RRSP deduction room through pension adjustments and potentially past service pension adjustments. You may still have available RRSP room; use your CRA deduction limit and consult your advisor before contributing.
What if my IPP outperforms expectations?
A surplus may reduce future company contributions or, where permitted, support additional benefits. Its treatment depends on the valuation, plan terms, and applicable rules.
At retirement or termination
What happens to the IPP if I retire or leave the company?
Depending on plan terms and applicable rules, benefits may be paid from the plan, used to purchase an annuity, or transferred to an eligible registered or locked-in arrangement. CRA transfer limits may mean some amounts cannot be transferred tax-deferred.
What happens if I pass away?
Death benefits depend on plan terms and applicable pension and tax rules. A spouse may have survivor benefit rights, and certain eligible lump-sum amounts may be transferred tax-deferred. Confirm the treatment for your beneficiaries with your advisors.
Can the company terminate the plan?
A company may be able to terminate the plan, subject to its terms and regulatory requirements. Pension benefits must be settled and any funding shortfall or tax consequences addressed; transfer limits and lock-in rules may apply.
Get started
Find Out What Your IPP Could Be Worth
No cost for an initial eligibility review and projection
Understand what an actuarial assessment considers
See the potential RRSP transfer, buyback cost, and company contribution breakdown before you commit
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