Dr. Emily Chen, a 58-year-old incorporated dentist, is deciding between contributing to an Individual Pension Plan (IPP) or her personal RRSP. Her corporation generates significant profits annually. She aims to maximize tax-deductible retirement savings. Her current annual T4 income from her corporation is $180,000. For 2023, the maximum RRSP contribution room is $30,780. If an actuarial valuation for an IPP for Dr. Chen allows for a current service contribution of $35,000 and a past service contribution of $70,000, which option provides the largest immediate tax deduction for the corporation in 2023?

Question: Dr. Emily Chen, a 58-year-old incorporated dentist, is deciding between contributing to an Individual Pension Plan (IPP) or her personal RRSP. Her corporation generates significant profits annually. She aims to maximize tax-deductible retirement savings. Her current annual T4 income from her corporation is $180,000. For 2023, the maximum RRSP contribution room is $30,780. If an actuarial valuation for an IPP for Dr. Chen allows for a current service contribution of $35,000 and a past service contribution of $70,000, which option provides the largest immediate tax deduction for the corporation in 2023?

Answer options: ✅ IPP contributions totaling $105,000.

• RRSP contribution of $30,780.
• An equivalent combination of both IPP and RRSP contributions up to $100,000.
• Neither option offers significant tax deductions due to her high income.

Correct answer: IPP contributions totaling $105,000.

Explanation: The IPP allows for a combined current and past service contribution of $105,000 ($35,000 + $70,000), which is significantly higher than the maximum RRSP contribution room of $30,780. These contributions are tax-deductible for the corporation.