Retirement planning for real estate agents

#retirementplanning #rrsp #ipp
Retirement Planning for Real Estate Agents in Canada 🇨🇦

Welcome to our latest video on retirement planning specifically tailored for real estate agents in Canada! In this video, we cover everything you need to know about securing your financial future, with a special focus on Individual Pension Plans (IPPs) 🏠💼.

What is an Individual Pension Plan (IPP)? 🤔
An IPP is a defined benefit pension plan designed for business owners and incorporated professionals, like real estate agents. Learn how an IPP works and why it might be the perfect retirement savings solution for you.

Who Should Consider an IPP? 🧐
Are you a real estate agent over 40 with a corporation? Find out if an IPP is the right choice for your retirement strategy and how it can benefit you more than a traditional RRSP.

Advantages of an IPP 🌟
Discover the many benefits of an IPP, including:

Higher contribution limits compared to RRSPs
Potential for larger tax deductions
Creditor protection
Enhanced retirement security

IPP Yearly Contributions 💰
Learn about the contribution limits, how they are calculated, and the flexibility of making contributions based on your income and age. Maximize your retirement savings with an IPP!

Withdrawing from IPP 💵
Understand the rules and regulations for withdrawing from your IPP. We’ll guide you through the process to ensure you make the most out of your pension plan during retirement.

Conclusion 🏁
Planning for retirement is crucial, especially for real estate agents with fluctuating incomes. An IPP can be a powerful tool to secure your financial future. Watch the video to get all the details!

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#RetirementPlanning #RealEstateAgents #Canada #IndividualPensionPlan #IPP #FinancialPlanning #RealEstateLife #RetirementGoals #PensionPlan #CanadianRealtors

1. Subscribe to my YouTube Channel: Real Estate and Taxes with Lakshay

2. Retirement planning for real estate agents By Lakshay Gandhi CPA, CGA 647-987-4025 [email protected]

3. Typical scenario Business owner earns $300,000 in incorporation $150,000 salary and dividends Contributes to RRSP to reduce personal taxes Our solution: Individual Pension Plan

4. Whats an IPP? An IPP is an effective way for a business owner or incorporated professional to save for retirement, shifting tax-deductible funds from the corporation to a pension , where they can be invested on a tax-deferred basis until retirement. This differs from an RRSP , where the individual can contribute funds and receive a tax deduction personally. This type of pension falls under the “defined benefit” vehicle, meaning that this plan will provide a set income when you decide to retire .

5. Wh o should consider an IPP?

6. Advantages for IPP Tax deductibility of Investment Management Fees, whereas in an RRSP they are not Improved creditor protection Enhanced estate planning through the ability to pass the assets of the IPP to surviving children who work for the company The contributions from the employer are also tax deductible for corporate tax purposes. The contributions are not taxable to the IPP member or employee until it is finally received as pension income.

7. IPP Yearly contributions

8. IPP Advantage

9. Maximum contribution rates 2023

10. Withdrawing from IPP When the IPP member decides to retire, in order to activate the IPP they have to decide how they will receive their pension income. Their options are to receive monthly pension from the plan, buy an annuity or transfer the IPP to a life income fund (LIF) or locked in retirement income fund (LRIF). The IPP acts much like an RRSP where you are obligated to receive income from the plan after the age of 71 and when you die the remainder goes to your spouse or estate.

11. Example 1 Jane – 52 years of age – self employed incorporated Real estate agent Withdraws $135,000 in salary Under RRSP – She can contribute $26,230 in current year Under IPP – She can contribute $30,779 in current year and $31,344 in the following year Assuming Jane works until 65 and the IPP earns 7.5% per year, the IPP will have accumulated value of $1,169,216 ($100k more compared to RRSP)

12. Example 2 Mayor – 55year old real estate brokerage owner – withdraws $100,000 in salary for last 10 years and maximizes the RRSP contributions. Can he benefit from IPP? IF Mayor opens an IPP now, He will be able to contribute an additional tax deductible amount of $167,878 this year He would need to move some assets from RRSP to IPP. Long term growth on funds will amount to 1,366,229 (100k more than RRSP)

13. Conclusion Ideally speaking, a strong IPP candidate meets all the minimum requirements, has a long employment history, and sports a high current salary. The older the individual and the higher the level of T4 income, the higher IPP contribution advantage that can be leveraged. If an IPP is established, the individual waives most of their future RRSP contribution room and takes advantage of the higher IPP contribution room available. “Defined benefit” pension plans are locked-in in most provinces, therefore IPP members cannot draw upon assets until commencing their pension from the plan.

14. Thanks for listening Lakshay Gandhi CPA, CGA 647-987-4025 [email protected] Subscribe to my YouTube channel – Real estate and Taxes with Lakshay