LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
A DC registered pension plan's employer contributions are:
- ARefundable to the employer if the member leaves before retirement, whatever the vesting rule in the plan text says
- BTaxable to the employee immediately as a benefit of employment, offset by an RRSP deduction
- COptional to vest at any time, since the sponsor decides when the member earns a right to them
- Not a taxable benefit, reduce RRSP room via the pension adjustment, and vest and lock in under pension law
Correct answer: D) Not a taxable benefit, reduce RRSP room via the pension adjustment, and vest and lock in under pension law
DC pensions have stronger member protections and less flexibility than group RRSPs.
Why the other options are wrong
- AVested contributions belong to the member.
- BThey are not taxable when contributed.
- CVesting rules are set by pension legislation.
Exam tip
DC RPP: PA, vesting, locking-in.
Common mistake
Telling a departing employee they can cash their DC pension.
What this tests
CISRO competency component 2.4 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 2
- A segregated fund's 'guaranteed amount' after a partial withdrawal under proportional reduction is:
- A distinctive estate advantage of a segregated fund over a non-registered mutual fund held jointly with a child is:
- Segregated fund guarantees are most valuable relative to their cost when:
- A segregated fund's annual statement reports:
- Compared with a segregated fund, an exchange-traded fund (ETF) generally offers:
- A segregated fund's 'automatic death benefit reset' feature:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.