LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
A group RRSP's employer contribution is treated as:
- AA non-taxable benefit, in the same way as an employer's contribution to a registered pension plan or a DPSP
- Salary contributed on the employee's behalf: taxable, deductible, using the employee's room
- CA DPSP contribution, which vests over two years and is not included in the employee's income
- DA gift from the employer, which is neither taxable to the employee nor deductible by the employer
Correct answer: B) Salary contributed on the employee's behalf: taxable, deductible, using the employee's room
Unlike a DC pension, group RRSP employer contributions flow through the employee's income. Many employers use a DPSP for the employer portion to avoid payroll taxes.
Why the other options are wrong
- AIt is taxable income, offset by the RRSP deduction.
- CA DPSP is a separate plan with different rules.
- DThe contribution is compensation, not a gift.
Exam tip
Group RRSP employer contribution = taxable salary + RRSP deduction; DPSP often pairs with it.
Common mistake
Missing that employer group RRSP contributions consume the employee's room.
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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