LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A client's retirement income will come mainly from a registered plan and a small government pension. The tax need this creates is:
- AHolding the registered plan until the client reaches ninety, when withdrawals finally become tax-free
- BNothing, since registered withdrawals in retirement are received free of tax
- Planning the withdrawal order and amounts, since registered income is fully taxable as received
- DConverting everything to an annuity, since annuity income is not taxable to the annuitant
Correct answer: C) Planning the withdrawal order and amounts, since registered income is fully taxable as received
Every dollar from a registered plan is income in the year it is taken, so bracket management and the interaction with income-tested benefits become the main planning levers.
Why the other options are wrong
- ANo age makes registered withdrawals tax-free.
- BRegistered withdrawals are fully taxable.
- DAnnuity income from a registered plan is taxed in full.
Exam tip
Registered income is fully taxable; plan the brackets.
Common mistake
Projecting retirement income before tax and calling it spendable.
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
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