The power of individual pension plans compared to RRSPs

financialpost.com:

Individual pension plans stand out as a sterling retirement savings option for some demographics of entrepreneurs and incorporated business owners, particularly those with T4 income of more than $100,000 and over the age of 40.

An IPP offers a robust alternative to the more common registered retirement savings plan (RRSP). But what exactly is an IPP, and why is it worth a spot in the financial strategies of a seasoned entrepreneur?

An IPP is a tax-sheltered retirement savings plan specifically designed for incorporated business owners and professionals. You might think of it as a supercharged RRSP, offering higher contribution limits and additional benefits tailored to the needs of successful individuals who have made significant strides in their careers.

The primary allure of an IPP lies in its enhanced contribution limits, which often exceed those of RRSPs. This feature becomes increasingly valuable as one grows older, allowing for accelerated retirement savings.

Furthermore, IPP contributions are tax deductible and may offer creditor protection, adding a layer of security to your hard-earned wealth.

There are several factors that make an IPP appealing to people in certain situations:

1. Age and income: The IPP is particularly advantageous for those older than 40 with a T4 income exceeding $100,000. While available to younger individuals, the benefits become more attractive as one enters this demographic.

2. Incorporated professionals: Those in fields such as law, medicine and accounting, where incorporation is common, find IPPs especially beneficial.

3. Family business and wealth transfer: For family-owned businesses, IPPs can be instrumental in intergenerational wealth transfer, ensuring the continuity of financial