Retirement Unit 9

Samara enjoys her work very much and has no plans to retire at age 65. Which of the following statements about Canada Pension Plan (CPP) is CORRECT?

She can start receiving her pension anytime between ages 65 and 70 even if she continues to work.

If she postpones her pension until after age 65, she will receive no additional benefit because of the delay.

If she postpones her pension until after age 65, her benefits may be subject to a clawback if her income is above a certain level.

She must apply for pension benefits at age 65 or risk losing them altogether.

What characteristic about a defined benefit pension plan is TRUE?

Contributions are made by the employee and the employer, or solely by the employer.

Employees assume the investment risk for their pension funds.

Retirement benefits are received tax-free by the employee.

Benefit amounts are always based on best five years.

What is the major advantage of a group registered retirement savings plan (RRSP) over an individual RRSP?

It is mandatory for employers to contribute to group RRSP plans.

Group RRSP contributions via payroll deductions result in immediate tax savings.

Group RRSPs offer more investment alternatives.

The employer accepts all the investment risk in a group RRSP.

Robert withdraws $25,000 from his registered retirement savings plan (RRSP) under the Home Buyer's Plan (HBP) on Jan 31, Year 1.

He must acquire his home by Oct 1, Year 2.

He must repay a minimum of $1,666.66 plus interest at a rate prescribed by CRA each year for 15 years.

His first HBP repayment must be made for the Year 1 calendar year any time before Mar 1, Year 2.

If Robert has a spouse, she cannot take advantage of the plan because the maximum withdrawal per family is $25,000.

Ellie is leaving her employer and wants to transfer out her vested pension funds to a locked-in retirement account (LIRA). Which of the following statements about Ellie's LIRA is CORRECT?

Ellie can make contributions to her LIRA.

Ellie controls the investments within her LIRA.

Ellie can withdraw from her LIRA at any time.

Ellie can convert her LIRA to a RRIF at retirement.

Paulette is 62 years of age. She was born in Austria but immigrated to Canada when she was 40 years old. She has resided in Canada ever since and even became a Canadian citizen at the age of 45. She wants to know if she qualifies to receive Old Age Security (OAS) benefits. What can you tell her?

Since she was not born in Canada, she does not qualify for any OAS benefits.

Although she does not qualify for full benefits, Paulette will receive partial OAS benefits.

Paulette cannot receive any OAS benefits because she is not 65 years of age.

Paulette qualifies for full OAS benefits since she has lived in Canada since age 40.

Your client, Rakesh, works for a manufacturing company. His employer has a defined contribution pension plan for its employees. Rakesh is curious about whether he should join the plan. What can you tell him about defined contribution pension plans?

The pension adjustment is based on the amount of employer and employee contributions for the year.

Only employer contributions are permitted for these plans.

The retirement benefit is known and guaranteed for the employee.

Contribution levels are based on the profitability of the company.

Simone will turn 71 years of age on July 1st of this year. With respect to her RRSP maturity options, she intends to open a RRIF. What statement is correct?

There is a maximum limit on how much Simone may withdraw from her RRIF.

Simone must withdraw a minimum payment from her RRIF beginning next year.

If Simone has earned income this year, she will be allowed to make a contribution to her RRIF.

Simone must withdraw a minimum payment from her RRIF before the end of this year.

As part of his tax planning strategy, Ian Elston wants to establish a self-directed spousal registered retirement savings plan (RRSP) for his wife, Debra. What is the last date on which Ian and Debra can contribute to their RRSPs and deduct the contribution from their current year’s tax return? Assume it is not a leap year.

December 31 of the current year

March 1 of the following year

March 31 of the following year

December 31 of the following year

Which statement applies to self-directed registered retirement savings plans (RRSPs)?

They typically hold a single type of investment.

They are managed by a trustee.

They are managed by the investor.

They guarantee a rate of return.

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Retirement Unit 9

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