Five Key Financial Considerations for Dental Grads
Contributed by: MNP As new dental graduates embark on their careers, equipping them with financial knowledge sets them up for ...
Individual Pension Plan (IPP)
Going over and above your RRSP
With An Individual Pension Plan You Can:
Create a personal pension plan through your professional corporation
Contribute much more than an RRSP allows
Gain a number of tax advantages
Determine pension income and contribution amounts that are right for you
Choose from a broad range of CDSPI investment funds
How Does it Work?
An IPP is a defined benefit pension plan that you can use to fund your own pension if you operate your dental practice through a professional corporation. You work with an actuary to determine the pension income and contribution amounts that are right for you. Then, your corporation makes tax-deductible contributions to the plan that are invested based on an established strategy. An actuarial valuation periodically ensures the plan is being properly funded. When you retire, the funds in the plan provide you with a predetermined annual benefit.
Who Can Benefit from an IPP?
An IPP is an excellent choice for dentists who would like to contribute considerably more to their retirement savings than RRSPs allow. Ideal candidates for IPPs are dentists aged 40–65 with annual incomes in excess of $120,000.
Gain These Advantages
Higher Contributions Allow Money-Saving Tax Deductions —
As the table below illustrates, an IPP can allow you to contribute significantly more for your retirement than an RRSP allows. If your corporation has existed prior to the establishment of the IPP, your corporation may be eligible to make additional past service contributions to the plan. All of these contributions are tax deductible to your corporation.
IPP Contribution Room vs. RRSP Contribution Room —
| IPP CONTRIBUTION ROOM | |||
|---|---|---|---|
| Age | 2022 | 2023 | 2024 |
| 40 | $ 31,000 | $ 31,800 | $ 32,700 |
| 45 | $ 34,000 | $ 34,900 | $ 35,900 |
| 50 | $ 37,400 | $ 38,300 | $ 39,500 |
| 55 | $ 41,100 | $ 42,100 | $ 43,400 |
| 60 | $ 45,100 | $ 46,300 | $ 47,600 |
| 65 | $ 49,600 | $ 50,800 | $ 52,300 |
| RRSP CONTRIBUTION ROOM | |||
| 2022 | 2023 | 2024 | |
| $ 29,210 | $ 30,780 | $ 31,560 | |
Based on a maximum pensionable income level of $171,000 for 2022, $175,334 for 2023, and $180,500 for 2024.
Creditor Protection —
Assets held in this IPP are exempt from the claims of creditors in most circumstances.
Superior Selection of Funds, Renowned Managers and Low Fees —
This IPP invests in the CDSPI family of investment funds. To fund your IPP, you’ll gain all of the advantages that come with CDSPI funds — which are available exclusively to dental professionals and their families.
Managed by leading fund managers, CDSPI funds have extremely low management fees ranging from 0.65 to 1.77 per cent1 depending on the fund selected — and no loads or routine service charges2 to hinder your returns. There are more than 30 CDSPI funds, including Managed Risk Portfolios (wrap funds), covering all major asset categories.
Eligibility
You are eligible to participate in this IPP if you are a dentist who is a member of a participating provincial or territorial dental association (in Quebec, only CDA members are eligible).
Get Started with an Individual Pension Plan
Eligible dentists can complete an application for their own individual pension plan.
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1 Management fees are subject to applicable taxes.
2 Surcharges may be levied for short-term trading.
* Restrictions may apply to advisory services in certain jurisdictions.