LLQP Segregated Funds & Annuities · Component 1.3 · 35% of the exam
A retired couple in different tax brackets ask how to even out their taxable income. Their income-splitting need can be addressed by:
- AOnly spousal RRSPs, since the tax rules prohibit any other transfer of income between spouses
- BNothing, since retirement income is taxed in the hands of whoever earned it
- Pension income splitting, spousal RRSPs, CPP sharing, and TFSAs funded from either spouse
- DTransferring investments to the lower-income spouse's name, so the income is taxed at their rate
Correct answer: C) Pension income splitting, spousal RRSPs, CPP sharing, and TFSAs funded from either spouse
Multiple tools reduce a couple's combined tax. RRIF and annuity income qualifies for pension splitting from 65.
Why the other options are wrong
- ASpousal RRSPs are only one of several income-splitting tools.
- BSeveral legitimate income-splitting tools exist for retired couples.
- DAttribution rules tax such transfers back to the giver.
Exam tip
Splitting: pension income splitting (65+), spousal RRSP, CPP sharing, TFSA.
Common mistake
Forgetting that RRIF income qualifies for pension splitting at 65.
What this tests
CISRO competency component 1.3 — 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.