LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
A spousal RRSP allows:
- ATax-free withdrawals by the annuitant spouse, since the contributor already paid tax on the money
- The contributor to deduct contributions to the other spouse's plan, splitting future income
- CBoth spouses to deduct the same contribution, doubling the tax saving for the household
- DUnlimited contributions, since the plan is not subject to the contributor's deduction room
Correct answer: B) The contributor to deduct contributions to the other spouse's plan, splitting future income
Spousal RRSPs equalize retirement income between spouses. The three-year attribution rule prevents short-term income splitting.
Why the other options are wrong
- AWithdrawals are taxable to the annuitant, or attributed back if made within three years.
- COnly the contributor deducts.
- DThe contributor's room limits contributions.
Exam tip
Spousal RRSP: contributor deducts, annuitant withdraws; 3-year attribution.
Common mistake
Withdrawing from a spousal RRSP within three years of a contribution.
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
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