IFC Tax and Retirement Planning 3

Question 1

Which of the following is NOT a registered retirement savings vehicle in Canada?

Accepted Answer

RESP

Answer

An RESP (Registered Education Savings Plan) is designed for education savings, not retirement savings.

Question 2

A Locked-In Retirement Account (LIRA) contains funds that originated from which source?

Accepted Answer

Pension plan commuted values

Answer

A LIRA holds commuted values transferred from employer-sponsored defined benefit or defined contribution pension plans.

Question 3

What is the spousal RRSP attribution rule designed to prevent?

Accepted Answer

Income splitting by withdrawing funds immediately after contribution

Answer

The attribution rule attributes withdrawals back to the contributing spouse if the plan is collapsed within three calendar years of the last contribution.

Question 4

How is the RRSP contribution limit for a given year determined?

Accepted Answer

It is 18% of the prior year's earned income, minus any pension adjustment, subject to a maximum

Answer

The RRSP limit is 18% of the previous year's earned income minus the pension adjustment (PA), up to the annual maximum.

Question 5

A client receives Canada Pension Plan (CPP) payments. How are these payments taxed?

Accepted Answer

As fully taxable income at the marginal rate

Answer

CPP payments are fully included in the recipient's taxable income and taxed at their marginal tax rate.

IFC - Investment Funds in Canada Practice Test

IFC - Investment Funds in Canada Practice Test

IFC Tax and Retirement Planning 3