Fabiola is an optometrist and an incorporated professional. She has fallen behind schedule regarding saving for retirement. She is considering opening an Individual Pension Plan (IPP).
What provision might encourage her to use an IPP?
A.
When Fabiola files her personal tax return, she will be able to claim contributions as an eligible deduction.
B.
Her pension benefit is not pre-determined because it is based on the returns on investments which she chooses.
C.
Contributions to her IPP can be greater than what applies to contributions for registered retirement savings plans.
D.
Withdrawals will be taxable to the business, not to Fabiola, when she starts receiving her pension income.
An IPP is a registered, defined-benefit pension plan that provides a fixed retirement benefit to the person designated in the plan. It is similar to an RRSP, but with some differences in contribution limits, deductions, and tax benefits. One of the main advantages of an IPP is that it allows higher contribution limits than an RRSP, especially for older and higher-income individuals. The contributions are based on the actuarial calculations of the pension benefit, and are tax-deductible for the sponsoring corporation. The higher contribution limits can help Fabiola catch up on her retirement savings and reduce her taxable income123
References = Canadian Investment Funds Course (CIFC) - Module 3: Registered Plans - Section 3.3: Individual Pension Plan (IPP) and web search results from search_web(query="individual pension plan")123
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