Tax and Retirement Planning Flashcards
7 cards from real IFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Tax and Retirement Planning flashcards as text
Which of the following is NOT a registered retirement savings vehicle in Canada?
Answer: RESP
An RESP (Registered Education Savings Plan) is designed for education savings, not retirement savings.
A Locked-In Retirement Account (LIRA) contains funds that originated from which source?
Answer: Pension plan commuted values
A LIRA holds commuted values transferred from employer-sponsored defined benefit or defined contribution pension plans.
What is the spousal RRSP attribution rule designed to prevent?
Answer: Income splitting by withdrawing funds immediately after contribution
The attribution rule attributes withdrawals back to the contributing spouse if the plan is collapsed within three calendar years of the last contribution.
How is the RRSP contribution limit for a given year determined?
Answer: It is 18% of the prior year's earned income, minus any pension adjustment, subject to a maximum
The RRSP limit is 18% of the previous year's earned income minus the pension adjustment (PA), up to the annual maximum.
A client receives Canada Pension Plan (CPP) payments. How are these payments taxed?
Answer: As fully taxable income at the marginal rate
CPP payments are fully included in the recipient's taxable income and taxed at their marginal tax rate.
What is the age by which an RRSP must be converted or collapsed?
Answer: Age 71
An RRSP must be converted to a RRIF, annuity, or collapsed by December 31 of the year the annuitant turns 71.
Which of the following investment types is PROHIBITED inside a TFSA?
Answer: Shares of a connected corporation
Shares of a corporation in which the TFSA holder has a significant interest (connected corporation) are considered a prohibited investment.