LLQP Segregated Funds & Annuities · Component 1.2 · 35% of the exam
The Home Buyers' Plan (HBP) allows an RRSP holder to:
- ATransfer RRSP funds directly to a TFSA so that the down payment grows tax-free
- BDeduct mortgage interest on the new home for as long as the RRSP loan remains outstanding
- Withdraw up to a limit tax-free for a first home, repaying the RRSP over a set period
- DWithdraw any amount tax-free for a home purchase, provided the home is the client's principal residence
Correct answer: C) Withdraw up to a limit tax-free for a first home, repaying the RRSP over a set period
The HBP is a loan from the RRSP to oneself. The Lifelong Learning Plan works similarly for education.
Why the other options are wrong
- ANo RRSP-to-TFSA transfer exists.
- BMortgage interest on a home is not deductible.
- DThe withdrawal is capped at the stated limit.
Exam tip
HBP/LLP: capped tax-free withdrawal, repayment schedule, shortfall is income.
Common mistake
Forgetting HBP repayments and triggering income inclusion.
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.