LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
A DPSP's vesting period under the Income Tax Act is at most:
- Two years of plan membership, after which employer contributions cannot be forfeited
- BFive years of continuous service, in line with the vesting rule that applied to pension plans historically
- CTen years of plan membership, which is the maximum period the Income Tax Act permits for any deferred plan
- DNo vesting period at all, since employer contributions to a DPSP belong to the employee from the first day
Correct answer: A) Two years of plan membership, after which employer contributions cannot be forfeited
The two-year maximum vesting is a key DPSP rule; some sponsors vest earlier.
Why the other options are wrong
- BFive years exceeds the two-year maximum the Income Tax Act allows.
- CTen years exceeds the two-year maximum vesting period allowed.
- DSponsors may impose vesting of up to two years.
Exam tip
DPSP vesting: maximum two years.
Common mistake
Assuming DPSP contributions vest immediately.
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
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