Quiz - March 24

Question 1

What is an RRSP?

Answer 1

• A contract or plan between you, the plan “annuitant”, and the plan “issuer”, usually a financial institution. You can make contributions to the plan over a period of years; these contributions are invested and earn income, providing you with savings to live on in your retirement.
• An RRSP is an account, not a specific type of investment. It can include stocks, bonds, mutual funds or several other types of holdings.

Question 2

What are the 3 main benefits that RRSPs provide in helping you save for your retirement?

Answer 2

1. You get a tax deduction for the amounts contributed (up to certain limits)
2. Earnings on the assets in your RRSP accumulate tax-free
3. RRSP funds are only taxed when withdrawn

Question 3

What happens to my RRSP when I die?

Answer 3

On your death, you are deemed to have collapsed any RRSPs that you have. Therefore, you will be taxable on the fair market value of the plan at that time.

Question 4

What is a Group RRSP?

Answer 4

An RRSP set up for a group of employees and funded through payroll deductions

Question 5

What is a Registered Retirement Income Fund (RRIF)?

Answer 5

An RRSP must be rolled into a RRIF by the time you turn 71 (other options are annuities and LIFs). RRIFs work much like RRSPs, but you have to withdraw minimum amounts each year.

Question 6

What is a Registered Retirement Savings Plan (RRSP)

Answer 6

• A plan that lets you accumulate retirement savings on a tax-sheltered basis, via tax refunds on contributions and tax-free compounding of returns.
• An RRSP is an account, not a specific type of investment. It can include stocks, bonds, mutual funds or several other types of holdings.

Question 7

What must happen with RRSPs?

Answer 7

RRSPs must be converted into a registered retirement income fund (RRIF), life annuity or taken in cash in the year in which you turn 71.

Question 8

Describe a Registered Education Savings Plan (RESP)

Answer 8

• RESPs are an agreement between you, as plan “subscriber”, and the plan “promoter” for an individual (the plan “beneficiary”) who can generally benefit from the funds contributed to and the income earned in the RESP.
• RESPs can be broken down into 2 broad categories:
  1. individual plans;
  2. group plans.

Question 9

What are the rules associated with Registered Education Savings Plans (RESPs)?

Answer 9

• Must start saving in an RESP before the end of the calendar year in which your child turns 15 to be eligible to receive any grants when the child is 16 or 17

Question 10

What are the advantages and disadvantages of RESPs?

Answer 10

• Unlike your RRSP, contributions to an RESP are not deductible.
  However, RESPs still provide the following benefits:
  1. Tax Deferral
  2. Income Splitting
  3. CESG Deposits
  4. CLB Deposits
  5. Provincial Plans

Question 11

What kind of RESPs are available?

Answer 11

RESPs can be broken down into 2 broad categories:

1. individual plans;
2. group plans.

Question 12

What is a Registered Pension Plan? (RPP)

Answer 12

Fund that you and employer put money into - tax deferred

Question 13

Reasonableness Test?

Answer 13

• Classic Anti-Avoidance Rule
• Fair Market Value in non-arm’s length transaction
• Attribution Rules - Spouse, Child
• Mortgage Foreclosures
• Gain