Exam CIFC Topic 1 Question 101 Discussion

Actual exam question for IFSE Institute's CIFC exam
Question #: 101
Topic #: 1

Last year at age 70, Gregory opened a registered retirement income fund (RRIF). Recently, Gregory unexpectedly received a large cash gift and presently does not need to depend on any payments from his RRIF.
He contacts his financial advisor Eric for guidance.
Which of the following statements by his financial advisor would be CORRECT?

A. Periodic contributions to a RRIF are permitted until Gregory reaches the age of 71. B. Withdrawals become mandatory within the first year of the plan being started. C. Gregory's account will be subjected to no maximum withdrawal limit but to an annual minimum withdrawal. D. Gregory must have attained the minimum age of 71 to open a RRIF.

Suggested Answer: C Vote an answer

Explanation
According to the Canadian Investment Funds Course, a registered retirement income fund (RRIF) is a type of registered plan that provides a stream of income in retirement. A RRIF can be opened at any age, but it must be established by the end of the year the annuitant turns 71. A RRIF cannot accept any contributions, but it can receive transfers from other registered plans, such as RRSPs, PRPPs, RPPs, or other RRIFs. A RRIF has no maximum withdrawal limit, meaning that the annuitant can withdraw any amount from the plan at any time.
However, a RRIF has a minimum withdrawal requirement, which is calculated based on the annuitant's age or the age of their spouse or common-law partner. The minimum withdrawal must be paid out in the year following the year the RRIF is opened and every year thereafter. The minimum withdrawal is taxable as income in the year of receipt.
Therefore, the correct answer is C. Gregory's account will be subjected to no maximum withdrawal limit but to an annual minimum withdrawal.
References: 1: Canadian Investment Funds Course - IFSE Institute 2 (Unit 9: Retirement)

by Nick at Jun 05, 2024, 04:47 PM

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