LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client is 75 with a RRIF and does not need the minimum withdrawals. The need is to:
- Manage the forced income, by using a younger spouse's age, reinvesting in a TFSA, or gifting
- BCash the RRIF, since a client who does not need the income should close the plan
- CAccept the tax, since nothing can be done about a mandatory withdrawal schedule
- DStop the withdrawals by written election, since the minimum applies only to clients who need income
Correct answer: A) Manage the forced income, by using a younger spouse's age, reinvesting in a TFSA, or gifting
RRIF minimums cannot be stopped, but their effect can be managed. Younger-spouse election reduces the minimum.
Why the other options are wrong
- BCashing out taxes the whole balance at once.
- CTax planning around the minimum is available.
- DMinimums are mandatory regardless of need.
Exam tip
Unneeded RRIF minimums: younger spouse's age, TFSA, gifting, insurance.
Common mistake
Failing to elect the younger spouse's age at RRIF setup.
What this tests
CISRO competency component 1.3 — 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.