LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A client has both a personal and a spousal registered plan. The review should note that withdrawals from the spousal plan:
- AAre tax-free to the annuitant spouse, since the contributor already claimed the deduction
- May be attributed to the contributor if a contribution was made in the withdrawal year or the two before
- CAre always taxed to the contributing spouse, whenever they are made
- DAre prohibited entirely until the annuitant spouse reaches the plan's stated maturity age
Correct answer: B) May be attributed to the contributor if a contribution was made in the withdrawal year or the two before
The attribution rule prevents a couple from splitting income by contributing and withdrawing in quick succession, so the timing of contributions and withdrawals has to be coordinated.
Why the other options are wrong
- AWithdrawals from a registered plan are taxable to someone.
- COnce the three-year window has passed, the annuitant is taxed.
- DWithdrawals may be made at any time, subject to tax.
Exam tip
Watch the contribution year and the two before it.
Common mistake
Withdrawing from a spousal plan shortly after a contribution.
What this tests
CISRO competency component 1.2 — Assess the client's needs and situation — which is weighted at 35% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 1
- The first step before recommending a segregated fund or annuity is to:
- A client's 'time horizon' for an investment is:
- 'Risk tolerance' in an investor profile refers to:
- A client says he wants 'high returns with no risk of losing money'. The agent should:
- Investment objectives are commonly classified as:
- Why is the client's marginal tax rate relevant to a segregated fund recommendation?
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.