The recently passed Federal Budget, once again increased maximum pensions. Each time these maximums go up, Individual Pension Plans become even more attractive.

The basic retirement planning vehicle for the incorporated professional, business owner or executive has traditionally been the simple RSP. For many years they have been a good vehicle for providing both tax deductibility and ongoing sheltering

Over the past five years, Individual Pension Plans (IPPs) have become more attractive because they allow business owners, and, potentially, key employees, to take advantage of tax rules surrounding pension plans to provide more tax-effective compensation and greater retirement savings. Specifically, IPPs allow companies to provide key individuals and owners with:

• Retroactive pensions
• Funding opportunity for investment shortfalls
• Bridge benefits for early retirement at full pension
• Lifetime indexing of pension income.

IPPs provide these benefits in a ‘just-for-you” specific plan.

Recently, IPPs have regained popularity. Not only have tax laws changed twice to favour the IPP, but the fees have plummeted as actuarial firms have specialized and systemized to streamline satisfying the reporting requirements. Additionally, illustration software has been developed that allows for side-by-side comparisons of IPPs and RRSPs to demonstrate if the advantages significantly outweigh the costs.

Is an IPP right for me?

• Are you between 40 and 64
• Do you have T4 income (maximum benefit if in excess of $90,000)
• Do you maximize your RRSPs annually?
• Is your company incorporated? (some professionals have seen the IPP as the impetus to incorporate)
• Are you looking for tax-effective ways to bonus-down corporate earnings?
• Is your company in a position to increase your retirement funding?

If you answered yes to these questions, then an IPP might be for you. We would be pleased to provide a detailed analysis of your situation. Simply email us at thaunn@haunnfinancial.com and we will forward the brief information requirements to you that will allow us to prepare your IPP Simulation.

If you have any questions, feel free to contact Tim Haunn at (905)821-8224 or thaunn@haunnfinancial.com .