The best time to set up an IPP was yesterday. The next best time is today.
Frequently Asked Questions About the IPP
At GBL, we often receive questions about setup timelines and ideal candidates for Individual Pension Plans (IPP). Here, we answer the most common inquiries:
Who is the ideal client?
When is the best time to set one up?
How long does it take to establish one?
What are the retirement options?
Why Choose an IPP Over an RRSP?
Higher Contribution Limits – Compared to an RRSP, an IPP allows for greater contributions, particularly as you age. This includes past service contributions which can be funded retroactively, as far back as 1991.
Tax Deductibility – Contributions, investment management, and actuarial expenses are 100% tax-deductible to the corporation, making IPP costs revenue-neutral.
Creditor Protection– For all assets contained within the IPP.
Intergenerational Transfer – In specific cases when children take over the family business.
Flexibility – Funding is no longer enforced in most provinces. View our article that outlines regulations from province to province here.
Who is the Ideal IPP Client?
An Individual Pension Plan is a powerful retirement savings tool, often referred to as a “supercharged RRSP”, designed for incorporated business owners and professionals.
Key Characteristics of an Ideal IPP Client:
Ages 40-71 – Optimal funding benefits apply within this range.
Incorporated Business Owner or Professional
Earns T4 Income – Must receive T4 income from the sponsoring corporation (the company setting up the IPP).
We are often asked when is the right age to set up an IPP. The answer to this depends. Older clients will likely have more past service contribution room, but less current service room; while younger clients will likely have less past service room, but more current service room.
IPP Retirement Options
When you retire, an IPP offers flexible withdrawal options, ensuring financial stability and tax-efficient planning.
Available Retirement Strategies:
Optional Top-Ups
Terminal Funding – Allows for additional lump-sum contributions to compensate for investment shortfalls.
Bridge Pension – Enables early retirees (before age 65) to draw additional funds until reaching standard pension eligibility.
Withdrawal Options:
Draw from the plan as a structured retirement income.
Collapse the plan into a LIRA (Locked-In Retirement Account) – Most funds transfer tax-free, but a taxable lump sum withdrawal may be required.
Purchase an Annuity for guaranteed lifetime income, though this option can be expensive
Approval and Funding Timeline
Setting up an IPP requires careful planning and compliance with regulatory approvals.
Expected Setup Time:
3-4 months from initial consultation to full CRA registration.
Contributions can be made within 120 days past the corporate year-end and still be deducted for that year—double the 60-day RRSP deadline.
Timelines, from exploration to funding
Key Deadlines for Registration & Contributions:
Applications should be submitted by corporate year-end to ensure full registration and access to past service contributions.
Past service contributions and RRSP transfers are made upon CRA approval.
Need Expert Advice? We’re Here to Help!
At GBL, we specialize in helping business owners and professionals maximize their retirement savings through IPPs. Whether you have questions or would like a complimentary illustration, we’re happy to assist.
Request Your Free, comprehensive IPP Guide Today! Visit www.gblinc.ca for more information.
About GBL
Founded in 1995, GBL is a leading provider of retirement, health, and cross-border pension solutions for business owners across Canada.
7,000+ Clients Served
3,000+ Financial/Investment Advisors in Our Network
2,000+ Actively Managed IPPs, RCAs, and SERPs
1,000+ Health Benefit Plans (HBPs) Created
3,000+ Fair Market Valuations (FMVs) Completed
With offices in Calgary and Toronto, we deliver expert, tailored pension solutions for businesses of all sizes.
Get in touch today and take control of your retirement future!
