As a Canadian physician nearing retirement, your financial landscape becomes more complex — and far more strategic. While RRSPs and TFSAs have been reliable tools throughout your career, they’re only part of the retirement equation. For many incorporated physicians, significant wealth often sits inside their Medical Professional Corporation (MPC), and unlocking it efficiently takes more than just basic planning.
Now is the time to look beyond traditional registered accounts and toward more advanced strategies like corporate withdrawals, Personal Pension Plans (PPPs), estate planning, and transitioning to income distribution.
Let’s explore how you can move confidently into retirement while minimizing tax, maximizing income, and preserving your legacy.
- Corporate Withdrawals: Tax-Efficient Strategies to Access Your MPC Wealth
If you’ve been running an incorporated practice, chances are your corporation holds a substantial amount of retained earnings. Simply withdrawing this money as salary or dividends can trigger unnecessary taxes — but with careful planning, you can structure withdrawals to minimize the tax bite.
Key strategies include:
- Dividends vs. Salary: A mix of both may be optimal. Salary can help you qualify for CPP and RRSP contribution room, while eligible dividends are taxed at lower rates.
- Capital Dividend Account (CDA): Your MPC may have access to a CDA, which allows you to pay out certain amounts — like the non-taxable portion of capital gains or insurance proceeds — to yourself completely tax-free.
- Timing and income splitting: Strategic timing of withdrawals and using a spouse as a shareholder (where applicable) can smooth your tax bill over time.
Proper planning here doesn’t just reduce taxes — it helps create a stable and predictable retirement income stream.
2. Personal Pension Plans (PPPs): Supercharged Retirement for Incorporated Physicians
If you’re over 40 and have high, consistent income through your MPC, a Personal Pension Plan (PPP) could become your most powerful retirement tool.
A PPP is a CRA-registered defined benefit pension plan built for incorporated professionals — combining the best of both defined benefit and defined contribution structures.
What makes a PPP ideal for physicians?
- Higher contribution limits than RRSPs as you age
- Corporation-funded — all contributions are deductible for your MPC
- Creditor protection — assets inside a PPP are shielded from lawsuits and bankruptcy
- Past service contributions — you may be able to make up for earlier years of high income before the plan was set up
- Flexible retirement income — includes options for early retirement, lump-sum transfers, and family benefits
Plus, PPPs can be structured to provide intergenerational planning, allowing family members in the business to benefit from the plan over time.
- Estate Planning: Protecting Your Legacy and Reducing Tax Exposure
Estate planning is more than just drafting a will — it’s about controlling how your wealth is transferred, both tax-efficiently and in alignment with your values.
For incorporated physicians, estate planning involves several advanced tactics:
- Estate Freeze: Lock in the current value of your corporation, allowing future growth to accrue to your heirs or a family trust.
- Dual Wills: In Ontario and some other provinces, physicians use dual wills to separate personal and corporate assets — reducing probate taxes significantly.
- Life Insurance with Corporate Ownership: When a corporately-owned life insurance policy pays out, the death benefit can flow tax-free through the CDA, increasing what your beneficiaries receive.
- Charitable Giving Strategies: Donations made through your will can help reduce estate taxes while supporting causes you care about.
Without proactive planning, your estate could lose a significant portion to tax — but with the right strategies, your legacy can be preserved for the next generation and beyond.
- From Accumulation to Distribution: Managing the Retirement Income Shift
During your career, the goal was simple: earn more and save more. In retirement, the game changes. Now, it’s about drawing down those assets in the most tax-efficient and sustainable way.
Questions every retiring physician needs to answer:
- When should I start drawing from my corporation?
- What order should I use my RRSP, TFSA, corporate savings, and government benefits?
- How do I ensure I don’t outlive my money?
Creating a personalized drawdown plan — one that balances tax, lifestyle needs, and longevity risk — ensures you make the most of the wealth you’ve built.
Final Thought: Retirement Should Be the Most Rewarding Chapter of Your Career
As a Canadian physician, you’ve spent years — even decades — serving others. Now it’s time to focus on your own future with the same level of dedication.
RRSPs and TFSAs laid the groundwork, but to truly optimize your retirement, it’s essential to think bigger — strategic corporate withdrawals, leveraging a PPP, and proactive estate and income planning can all work together to support a comfortable and secure retirement.
Ready to Retire on Your Terms?
At MedTax, we specialize in helping Canadian physicians like you build tax-efficient retirement strategies that reflect your goals, your lifestyle, and your legacy.
Visit MedTax.ca to speak with experts who understand your unique financial situation as a medical professional.
