- Overview
- Annual Administration
- Setup Process
IPP Overview
An IPP is a defined benefit pension plan and sets your monthly income at retirement.
Covered earnings for IPPs are up to $132,334 in 2012 dollars. An IPP permits the accumulation of greater retirement assets, up to 65% more compared to an RRSP. Contributions to an IPP are based on a percentage of employment earnings graduated by age, therefore the older you are, the more you can contribute.
The IPP is similar to an RRSP in that it uses an investment account that accumulates over time to provide retirement benefits. Unlike the RRSP, the IPP provides greater certainty of retirement assets, and allows the company to make additional tax deductible contributions should the rate of return on plan assets be less than 7.5% a year.
Key Benefits of the Individual Pension Plan (IPP)
- Increase retirement assets and have your company make large tax deductible contributions.
- Up to 65% more annual contribution room compared to RRSPs.
- Reduce investment risk. Additional tax deductible contributions are allowed by the company should the rate of return be less than 7.5% per year.
- 100% creditor proofing of plan assets.
- Safer investment rules and limitations compared to RRSPs.
- Pension plan surpluses belong to the member.
- Provides pre-determined retirement benefits.
- Allows a significant tax deductible contribution at retirement.
- All costs, including investment expenses associated with the IPP are tax deductible to the company.
The Ideal Candidate
An owner, incorporated professional, or executive, age 40 and over, and earning over $132,334 in T4 or T4PS income, is the ideal candidate. IPP contribution limits increase with age, therefore an IPP may also be established for candidates with lower earnings.
To learn more about this product, contact GBL or register as an advisor.
IPP Annual Administration
For calendar year 2011, the administration process is completed in 3 parts - please take note of any deadlines.
- 1. Account Summary Form
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Deadline is March 1, 2012
The annual summary form is sent to the Advisor (or in some cases the Accountant) in January of each year. This form requests the following information:
- Contributions made to the IPP
- RRSP Transfers into the IPP
- Value of the Plan assets at Dec 31, 2011
- Portfolio holdings at Dec 31, 2011
- 2. Pension Adjustment Form
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Deadline is prior to issuing a T4 Slip for Plan Member(s)
The pension adjustment form is mailed in January to the sponsoring company. A pension adjustment (PA) and the plan's registration number is required to be included on each IPP member's T4 slip. The sponsoring company will need to complete the PA form and submit to our office by mail, fax or e-mail to obtain a pension adjustment.
- 3. Annual Information Notices
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Mailed to the Sponsoring Company in January of each year, this letter requests information from the sponsoring company required to complete the annual administration requirements for an IPP.
You may download a copy of this form specific to your province below:
Visit our resources page for additional information, downloads and links.
If you have any questions related to this process, contact us.
IPP Setup Process - 5 Simple Steps
Step 1 – Request a Personalized Quote
Complete our questionnaire online or download a PDF version. Your GBL representative will prepare a custom IPP quote at no cost within 1-2 business days.
Step 2 – Understanding the Quotation
Upon receipt of your IPP quote, please contact your GBL representative who is available for consultation in-person or via conference call to answer any questions that may arise.
Step 3 – Setting up the IPP
Once you decide to set up an IPP, you must complete our authorization form and return fax or courier to your GBL representative. Please allow 5-10 business days to receive your IPP package.
Step 4 – Document Signing
Your GBL representative is available to assist in the signing process and answer any last minute questions. Upon final execution of the IPP agreements, GBL will register the plan with Canada Revenue Agency (CRA) and the provincial authority (if applicable).
Step 5 – Fund the Plan
Your IPP is self directed therefore, working with your planner you can identify your objectives and see that your assets are invested according your preferences and CRA funding regulations.
