LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A Registered Retirement Savings Plan (RRSP) provides:
- ANo tax benefits beyond deferral, since contributions are made from after-tax income
- BGovernment matching grants on contributions, in the same way as an RESP or RDSP
- Deductible contributions, tax-deferred growth and taxable withdrawals, maturing at 71
- DTax-free withdrawals in retirement, since the money has already been taxed on the way in
Correct answer: C) Deductible contributions, tax-deferred growth and taxable withdrawals, maturing at 71
RRSPs defer tax from earning years to (usually lower-income) retirement years. Deduction room accrues from earned income.
Why the other options are wrong
- ADeduction and deferral are the benefits; contributions are pre-tax.
- BGrants are RESP and RDSP features, not RRSP ones.
- DWithdrawals are fully taxable as income.
Exam tip
RRSP: deductible in, deferred growth, taxable out, mature by 71.
Common mistake
Confusing RRSP (taxable withdrawals) with TFSA (tax-free withdrawals).
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.