Incorporated business owners are often given tired advice like

‘Max out your RRSP.’

‘Maybe open a TFSA.’

And for the ambitious - ‘Save inside the corporation.’

That is the playbook.

And for a long time, it was good enough.

But good enough is not a wealth strategy. And when I sit across from a founder who has spent two decades building a profitable company, paying themselves strong T4 income, and still relying solely on an RRSP to fund their retirement, I have to be honest with them.

There is a better vehicle available.

It has been available for over a century.

And the reason they have never heard about it is not because it does not work. It is because almost nobody in the advisory world is talking about it.

I am talking about registered pension plans - often called Individual Pension Plans (IPPs) or Personal Pension Plans - sponsored by your own corporation. If you’ve been a reader of this column for any length of time, you’ve heard me talk about them. Have you taken action yet though? Probably not! Because it sounds like one more acronym you don’t have the time for right now. And I hear you.

Here’s what I can tell you. Once you understand how they compare to the RRSP, you start to wonder why this was not part of the conversation from day one.

Let me start with contribution room, because that is usually what gets people's attention. With an RRSP, you get one annual contribution - 18 percent of last year's earned income, up to the annual maximum. For 2025, that ceiling is around $32,490. That is it.

One kick at the can.

A registered pension plan offers up to seven corporate tax deductions.

You get credit for recognizing years of past service.

You get a higher annual contribution rate that can reach approximately 30 percent of income by age 64.

You get special catch-up payments if the plan's investments have not hit the assumed rate of return.

Your investment management fees become a deduction.

If you borrow to fund the plan, the interest is deductible.

And if you retire early, there is a terminal funding contribution that allows the corporation to top up the plan so your pension is not penalized.

Seven levers versus one.

Now layer on what happens when life gets complicated, because it often does.

If you become a non-resident of Canada, your pension plan assets are considered exempt from departure tax.

Zero.

An RRSP does not enjoy that treatment.

And when it comes time to collect income abroad, most tax treaties reduce the withholding rate on pension income to 15 percent flat.

RRSP withdrawals by a non-resident?

Twenty-five percent.

That is not a rounding error.

That is a 40 percent reduction in your tax bill, just by having the right structure.

What about creditor protection?

In Ontario, pension plan assets are creditor protected. RRSPs held outside of an insurance company are not. For a business owner operating in a litigious industry or navigating volatile markets, that distinction is the difference between sleeping at night and hoping for the best.

And then there is the conversation no one wants to have - what happens when you die. If you pass away without a surviving spouse and your RRSP is worth two million dollars, the full amount is included in your terminal tax return.

Your estate could lose half of it to the CRA.

But inside a registered pension plan, you can designate multiple beneficiaries, including your children, your grandchildren, and charitable organizations.

Each beneficiary is taxed only on what they receive.

Charities pay nothing.

The income-splitting potential is enormous, and it is simply not available through an RRSP.

Here is what I find ironic. The pension rules in the Income Tax Act date back to 1917. The RRSP only arrived in 1957. The TFSA came along in 2009. The pension plan (IPP) is the original retirement vehicle. It is not new. It is not exotic. It is bedrock. And yet most business owners have never been told it exists for them.

Part of the reason is that until December 2020, the provincial regulatory burden in Ontario made these plans feel rigid and expensive. That changed when the Ontario government eliminated provincial registration for connected persons - business owners who hold at least 10 percent of their company. The mandatory contribution rules, the locking-in rules, the provincial fees - all gone. What remains is a streamlined, federally registered structure that offers more flexibility than most people realize.

The only thing standing between most incorporated business owners and a stronger retirement outcome is awareness. As pension lawyer JP Laporte told me on a recent episode of The Cash Rich Exit Podcast, in 14 years and tens of thousands of cases, he can count on two hands the situations where a registered pension plan did not make sense.

Two hands!

Under 10!

The mind boggles.

If you are incorporated, earning strong income, and your current strategy stops at the RRSP, it is time to look further. Book a 1:1 Wealth Gap Analysis with me and let us find out what belongs in your plan - and what has been missing.

Reach out on LinkedIn -  Colleen O’Connell-Campbell - or email me.

TTFN (ta ta for now)

Colleen

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