LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A client's spouse died and left her a RRIF as successor annuitant. This means:
- AThe RRIF must be closed within a year, since a successor annuitant only has the right to wind it up
- BShe receives a lump sum equal to the balance, taxed as income in the year of her spouse's death
- She continues the RRIF as her own, with payments continuing and no immediate tax
- DThe RRIF was cashed and taxed on the deceased's final return, and she receives the after-tax balance
Correct answer: C) She continues the RRIF as her own, with payments continuing and no immediate tax
Successor annuitant status avoids the deemed disposition at death. It differs from receiving the RRIF as beneficiary and transferring.
Why the other options are wrong
- AAs successor annuitant the RRIF continues; it does not need to be closed.
- BPayments continue as income; there is no forced lump sum.
- DContinuation avoids immediate tax on the balance.
Exam tip
RRIF successor annuitant: seamless continuation, no deemed disposition.
Common mistake
Advising a surviving spouse to cash the RRIF and pay tax on the whole balance.
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.