In short: An Individual Pension Plan fits a physician who is over about 40, earns a consistent high income, has corporate surplus they will not need before retirement, and is approaching the $50,000 passive income threshold; it does not fit a younger physician, uneven income, or someone who needs flexibility. ZAI Wealth Management sets out why advisors like IPPs (larger deductible contributions than an RRSP after 40, past-service funding, growth outside passive income, creditor protection) and why accountants push back (actuarial valuations every three years, extra filings, a required T4 salary, locked-in funds).
What an IPP is
An Individual Pension Plan is a defined-benefit pension your MPC sets up for you. For older, higher-income physicians, the corporation can usually contribute more than your RRSP limit allows, and contributions are deductible to the corporation.
Why advisors like them
- Larger tax-deductible contributions than an RRSP, especially after 40.
- Past-service contributions for earlier years of salary.
- Growth inside the plan isn't corporate passive income, which helps with the clawback.
- Creditor protection as a registered pension.
Why accountants push back
- Actuarial valuations: a certified valuation every three years, typically a few thousand dollars.
- Extra filings: annual pension filings on top of the corporate return.
- Salary needed: an IPP requires steady T4 salary, which many dividend-only setups don't have.
- Less flexibility: money is locked in for retirement, and funding may be required in some years.
A simple way to decide
- Usually not yet: you're under 40, your income is uneven, or you want full flexibility over corporate cash.
- Worth a close look: you're over 40, earn a steady high income, have surplus you won't need until retirement, and your passive income is approaching $50,000.
Neither professional is wrong. They're weighing different things, so get them in the same conversation.
Run your own numbers with our Physician Tax Savings Calculator.
For illustration and general information only. Tax rules change and every situation is different, so speak with your advisor and accountant before acting on anything here.
Common questions
Why do accountants and advisors disagree about Individual Pension Plans?
Advisors like IPPs because they allow larger deductible contributions than an RRSP after age 40, permit past-service funding, keep growth outside corporate passive income and offer creditor protection. Accountants push back because IPPs need an actuarial valuation every three years, extra filings, a T4 salary, and lock the money until retirement. ZAI Wealth Management's test: over 40, consistent high income, surplus not needed before retirement, and approaching the $50,000 passive income line.