LLQP Segregated Funds & Annuities · Component 3.2 · 25% of the exam
For a registered plan transfer from another institution into a segregated fund RRSP, the agent should:
- Complete the direct transfer form so the funds move plan-to-plan without tax
- BTransfer the funds to a TFSA first, since a TFSA-to-RRSP transfer is exempt from withholding tax
- CDo nothing beyond the application, since the receiving insurer requests the funds automatically once the contract is issued
- DHave the client withdraw the funds and redeposit them, since a withdrawal and recontribution within sixty days is tax-free
Correct answer: A) Complete the direct transfer form so the funds move plan-to-plan without tax
Direct transfers preserve registered status. Withdrawals are taxable and, for RRSPs, permanently lose contribution room.
Why the other options are wrong
- BRRSP funds cannot be transferred into a TFSA.
- CA transfer form is needed to move the funds.
- DWithdrawal is taxed and room is lost.
Exam tip
Registered transfers: direct transfer forms, never withdraw-and-redeposit.
Common mistake
Cashing a RRIF to fund a new one.
What this tests
CISRO competency component 3.2 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Segregated Funds & Annuities module. Written against the published curriculum.
More from component 3
- A client's spouse must sign for:
- When the insurer requests additional information after the application (for example, source of wealth for a large deposit), the agent should:
- The implementation of a recommendation involving a switch from one seg fund to another within a contract requires:
- A client wishes to designate a charity as beneficiary of a segregated fund. Implementation should:
- For a deferred annuity implemented for a client, the agent should confirm:
- The agent's record of the implementation should be retained:
Practice the whole Segregated Funds & Annuities module
Timed sets weighted like the exam, and review of every question you miss. Free to start.