LLQP Segregated Funds & Annuities · Component 1.1 · 35% of the exam
A client mentions he has been contributing to a locked-in plan transferred from a former employer's pension. The profile should note:
- That locked-in funds accept no new contributions and are restricted until retirement
- BThat the funds are freely accessible once the plan has been held for five years
- CThat he may contribute to it each year using his own RRSP deduction room
- DThat the plan must be collapsed and the proceeds taxed before any investment change is made
Correct answer: A) That locked-in funds accept no new contributions and are restricted until retirement
A locked-in plan receives a transfer and nothing further, and the pension jurisdiction's rules restrict when and how the money can eventually be drawn.
Why the other options are wrong
- BAccess is governed by pension legislation rather than by a holding period.
- CLocked-in plans do not accept ordinary contributions.
- DInvestments inside the plan can be changed without collapsing it.
Exam tip
Locked-in means transfers in, restrictions out.
Common mistake
Treating a locked-in plan as an ordinary registered account.
What this tests
CISRO competency component 1.1 — 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.