LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client needs income now but her RRSP is her only asset and she is 58. The need analysis should address:
- She can convert part of the RRSP to a RRIF or annuity before 71, weighing current needs against capital
- BNothing can be done, since registered money is inaccessible until the year she turns 71 under the Income Tax Act
- CRRSP withdrawals are tax-free at 58, since she is past the age at which the penalty applies
- DShe must start CPP now to fund the shortfall, since the RRSP is meant for later years
Correct answer: A) She can convert part of the RRSP to a RRIF or annuity before 71, weighing current needs against capital
RRIF conversion can occur at any age. Early drawdown must be weighed against longevity risk.
Why the other options are wrong
- BConversion and withdrawal before 71 are permitted.
- CWithdrawals are taxable at any age.
- DCPP is not available at 58 and is a separate decision.
Exam tip
RRSP → RRIF at any age; taxable; watch early depletion.
Common mistake
Telling a client she cannot access her RRSP before 71.
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.