Fiscal and Financial Planning Guide 2024-2025

Retirees > Individual Pension Plans (IPP)

Incorporated clients

Until 2018, taking into account the different tax rates it was generally preferable that companies pay dividends for the remuneration of their shareholders instead of salaries.

Starting in 2018 and following changes in tax rates, it has generally became more advantageous to pay salaries instead of dividends, which is now the case for the majority of incorporated clients.

Since this change, incorporated clients have the possibility to contribute to their RRSP. The maximum annual RRSP contribution in 2024 is $30,780 or 18% of a salary of $171,000.

Another option now available is to implement an Individual Pension Plan (IPP).

The main advantage of the IPP over the RRSP as show in the illustration below is that the annual contribution increases with age while the RRSP contribution is the same at $30,780 regardless of age. The IPP contribution becomes higher than the RRSP contribution at age 35 and reaches around $50,000 at age 65.

If you are incorporated and over the age of 35, contributing to an IPP instead of an RRSP could be a beneficial strategy.

Please consult the specific IPP Bulletin on our website, or ask your advisor for more information.

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