Module 2

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What is a key characteristic of a Registered Retirement Savings Plan (RRSP) in terms of contributions?

Contributions can only be made by the employer

Contributions are not deductible for tax purposes

Contributions are tax-deductible within Income Tax Act limits (correct)

Contributions are tax-exempt at the time of withdrawal

What happens to investment earnings in a Registered Retirement Savings Plan (RRSP)?

Investment earnings are tax-sheltered (correct)

Investment earnings are taxed annually

Investment earnings are taxed at a reduced rate

Investment earnings are exempt from taxation

In a Group RRSP, what is the main advantage of having centralized administration?

Employer contributions are considered additional employee earnings (correct)

Individuals have less control over their investments

It requires higher contribution amounts from employees

Employees can opt out of contributing if they choose

What is the purpose of a 'spousal' account in a Group RRSP?

To allow the spouse to contribute to the employee's retirement savings Signup and view all the answers

What distinguishes Spousal RRSP withdrawals from regular RRSP withdrawals?

Spousal RRSP withdrawals have different tax rules than regular RRSP withdrawals Signup and view all the answers

At what age must an individual purchase an annuity or transfer their RRSP to a RRIF?

71 years old Signup and view all the answers

What is the main purpose of a spousal RRSP?

To allow the employee to contribute to their spouse's retirement savings Signup and view all the answers

In the context of RRSP contribution limits, how are historical contributions taken into account?

They are not relevant in determining the contribution limit Signup and view all the answers

What are some examples of 'earned income' as defined by the Income Tax Act for RRSP purposes?

Business income Signup and view all the answers

What additional costs might a plan sponsor experience in relation to contributions to a Group RRSP under the ITA?

Additional payroll taxes Signup and view all the answers

What is the maximum amount a plan sponsor can contribute to a DPSP in respect of a plan member?

$18,000 per year Signup and view all the answers

What is the tax implication of withdrawing funds from a Group RRSP or DPSP before retirement?

Tax deducted on withdrawals ranges from 10% to 30% Signup and view all the answers

Which retirement income option allows a member to defer income from an RRSP portion to age 85?

Advanced Life Deferred Annuity Signup and view all the answers

What feature of a Group RRSP makes it advantageous for employees compared to an individual RRSP?

Convenient payroll deductions Signup and view all the answers

In the context of retirement income options, what is a key difference between a Life Income Fund (LIF) and a Registered Retirement Income Fund (RRIF)?

Maximum withdrawal amount Signup and view all the answers

What is a significant advantage of a Group RRSP and DPSP combination for employers compared to a DC registered pension plan?

Flexible employer contribution provisions Signup and view all the answers

Why might an employer choose to contribute to a DPSP instead of a Group RRSP?

Employee retention incentives Signup and view all the answers

What is the main factor determining how plan sponsors set contribution amounts to Group RRSPs and DPSPs?

Company profits Signup and view all the answers

What is a potential advantage of a DPSP compared to a Group RRSP for employees?

More accessible funds at termination Signup and view all the answers

What happens to forfeited amounts in a DPSP if an employee leaves before the vesting period is complete?

They are retained by the employer Signup and view all the answers

How does a DPSP incentivize employees to contribute to increasing company profits?

Higher contribution matching Signup and view all the answers

What is one way in which a DPSP differs from a DC registered pension plan in terms of accessibility of funds?

Lump sums allowed before termination Signup and view all the answers

What is a key aspect of the fiduciary responsibility of a plan sponsor of a Group RRSP or a DPSP?

Setting parameters for administrators and fund managers Signup and view all the answers

In what way are Group RRSP/DPSP with multiple investment choices affected by the Capital Accumulation Plan Guidelines?

'Non-discrimination' requirements enforced Signup and view all the answers