LLQP Segregated Funds & Annuities · Component 2.4 · 30% of the exam
The advantages of group retirement plans for the employee include:
- ANone beyond convenience, since the same investments are available to the employee privately at the same cost
- BGuaranteed returns, since the sponsor must make good any losses in the plan's investment options
- Employer contributions, lower fees, payroll discipline, immediate tax relief and selected options
- DUnlimited contributions, since group plans are exempt from the individual RRSP limit
Correct answer: C) Employer contributions, lower fees, payroll discipline, immediate tax relief and selected options
The curriculum lists advantages of group plans. Employer matching and lower fees are the largest benefits.
Why the other options are wrong
- AMany advantages exist, beginning with employer contributions.
- BThere is no guarantee in a capital accumulation plan.
- DContribution limits apply to group plans as to individual ones.
Exam tip
Group plan benefits: matching, low fees, payroll discipline, immediate tax relief.
Common mistake
Advising an employee to skip the group plan and invest privately, forfeiting matching.
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
Timed sets weighted like the exam, and review of every question you miss. Free to start.