Is an Individual Pension Plan (IPP) right for you?

The RRSP alternative most incorporated business owners in Canada never consider.
It's called an Individual Pension Plan.

If you're an incorporated business owner, incorporated professional, or senior executive earning T4 salary from your corporation in Canada, and especially if you're over 45, there's a retirement savings strategy that almost certainly offers more than your current RRSP alone: the Individual Pension Plan (IPP).

An IPP is a registered defined benefit pension plan that your corporation establishes and funds on your behalf. Unlike a RRSP, which has a flat annual contribution limit regardless of your age, IPP contribution limits increase with age, and the corporation funds them as a fully tax-deductible business expense, reducing your net corporate taxable income while building your personal retirement wealth.

"By age 50, IPP contribution room can exceed RRSP limits by 65% or more, funded in pre-tax corporate dollars, not after-tax personal income."

At Hall Wealth Counsel, our background as CPA’s and tax professionals means we look at your retirement not in isolation, but as part of your full corporate and personal financial picture. An IPP, when structured correctly, can be a powerful tool for business owners for building tax-deferred retirement wealth while lowering today's corporate tax burden.

Who is an IPP designed for?

  • Incorporated business owners
    Drawing T4 salary, age 45+, with steady corporate cash flow.
  • Incorporated professionals
    Physicians, dentists, lawyers, engineers with professional corporations.
  • Senior executives
    Key employees earning T4 income of $150,000+ from a corporation.
  • Owners retaining key staff
    IPPs can also be structured for top employees as a retention tool.

IPP vs. RRSP: how do they compare?


Most Canadians default to the RRSP for retirement savings, and it's a solid foundation. But for incorporated owners and professionals over 45, the IPP typically offers meaningfully more room to grow tax-deferred wealth. Here's how the two compare:

 

IPP

RRSP

Who funds it

IPP

Your corporation (pre-tax)

RRSP

You personally (after-tax)

Contribution limit

IPP

Actuarially defined, grows with age

RRSP

Fixed annual limit ($33,810 in 2026)

Tax deduction

IPP

Corporate deduction, reduces business income

RRSP

Personal deduction only

Past service buyback

IPP

Yes, fund prior years of T4 service

RRSP

No

Retirement income

IPP

Defined benefit, predictable pension

RRSP

Market-dependent

Creditor protection

IPP

Generally protected under pension legislation

RRSP

Limited — varies by province

CRA registration required

IPP

Yes, registered plan with ongoing actuarial reviews

RRSP

Yes

Key advantages of an IPP for retirement planning in Canada

  • Higher tax-deferred contribution room: IPP limits exceed RRSP limits, particularly for business owners over 45 drawing T4 salary of $150,000 or more. The gap widens significantly through your 50s and 60s.
  • Past service contributions: One of the IPP's most compelling features your corporation can contribute a lump sum to buy back years of prior T4 service, creating a large, immediate tax deduction. A transfer from participant’s RRSP to the IPP may be necessary for the cost of past service.
  • Corporate tax deductibility: Every dollar contributed by the corporation including administration fees and actuarial costs, is fully deductible as a business expense under CRA (Canada Revenue Agency) rules.
  • Tax-deferred growth: Investments inside the IPP grow tax-deferred until retirement, just like an RRSP, but in a structure funded with pre-tax corporate dollars.
  • Pension income splitting: IPP pension income is generally eligible for income splitting with a spouse, even before age 65, providing a meaningful tax planning advantage for couples.
  • Creditor protection: Assets held in a registered pension plan are generally protected from creditors under provincial pension legislation, a critical consideration for business owners with personal liability exposure.
  • Terminal funding: In the year of retirement, an additional actuarially calculated lump sum contribution can be made, a final opportunity to maximize tax-deductible contributions before drawing your pension.
  • Key employee retention: An IPP can be extended to cover highly compensated key employees, serving as both a retirement planning tool and an executive compensation and retention strategy.

Establishing an IPP requires working with an actuary to design the plan and calculate contributions and registering the plan with the CRA. Hall Wealth Counsel coordinates this process alongside your accountant and actuary, integrating the IPP into your broader wealth management and tax planning strategy.

Based in Ottawa, Ontario, we work with incorporated business owners and professionals across the region who are looking for smarter, more tax-efficient approaches to building retirement wealth. If you've been relying solely on your RRSP and your corporation has meaningful cash flow, an IPP conversation is worth having.

Interested in more?

Contact us today to discuss how an Individual Pension Plan can optimize your corporate tax strategy and accelerate your retirement wealth.