Locked-In Retirement Income Vehicles Withdrawals

KNOWLEDGE EXPECTED OF: QAFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define the types of withdrawals that may be made from a locked-in retirement income vehicle.
    • Prescribed mandatory annual minimum withdrawal
    • Prescribed mandatory annual maximum withdrawal
    • Excess amounts
    • Extenuating circumstances
    • Unlocking provisions under pension legislation 
  • Identify when the first prescribed mandatory annual minimum payment for a locked-in retirement income vehicle must be taken.  
  • Explain the prescribed mandatory annual minimum withdrawal for a locked-in retirement income vehicle. 
  • Explain the prescribed mandatory annual maximum withdrawal for a locked-in retirement income vehicle. 
  • Identify circumstances when funds may be withdrawn from a locked-in retirement income vehicle (subject to jurisdiction), such as:
    • Financial hardship
    • Shortened life expectancy
    • Small balance
    • Non-residency
    • Spousal or child maintenance enforcement orders 
  • Identify that rules for withdrawals of funds from a locked-in retirement income vehicle may differ based on differences in provincial/territorial pension legislation.  
  • Identify the rules for withdrawing funds from a locked-in retirement income vehicle. 
  • Identify the current withholding tax rates for excess amounts withdrawn from a locked-in retirement income vehicle.1 
  • Determine how each of these factors may impact the suitability of withdrawing from a locked-in retirement income vehicle: 
    • Tax impact
    • Administrative fees
    • Loss of asset growth within locked-in retirement income vehicle 
    • Annual minimum requirements and maximum allowances 
  • Evaluate how each of the factors may impact the suitability of withdrawing from a locked-in retirement income vehicle. 
  • Calculate the withholding tax for a cash withdrawal from a locked-in retirement income vehicle. 
  • Explain how taxes payable on a cash withdrawal from a locked-in retirement income vehicle may differ from the withholding taxes collected by a financial institution. 

REFERENCES

1 https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/making-withdrawals/tax-rates-on-withdrawals.html 

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define the types of withdrawals that may be made from a locked-in retirement income vehicle.
    • Prescribed mandatory annual minimum withdrawal
    • Prescribed mandatory annual maximum withdrawal
    • Excess amounts
    • Extenuating circumstances
    • Unlocking provisions under pension legislation 
  • Identify when the first prescribed mandatory annual minimum payment for a locked-in retirement income vehicle must be taken.  
  • Estimate the prescribed mandatory annual minimum withdrawal for a locked-in retirement income vehicle. 
  • Estimate the prescribed mandatory annual maximum withdrawal for a locked-in retirement income vehicle. 
  • Identify circumstances when funds may be withdrawn from a locked-in retirement income vehicle (subject to jurisdiction), such as:
    • Financial hardship
    • Shortened life expectancy
    • Small balance
    • Non-residency
    • Spousal or child maintenance enforcement orders 
  • Identify that rules for withdrawals of funds from a locked-in retirement income vehicle may differ based on differences in provincial/territorial pension legislation.  
  • Identify the rules for withdrawing funds from a locked-in retirement income vehicle. 
  • Identify the current withholding tax rates for excess amounts withdrawn from a locked-in retirement income vehicle.1
  • Determine how each of these factors may impact the suitability of withdrawing from a locked-in retirement income vehicle: 
    • Tax impact
    • Administrative fees
    • Loss of asset growth within locked-in retirement income vehicle 
    • Annual minimum requirements and maximum allowances 
  • Evaluate how each of the factors may impact the suitability of withdrawing from a locked-in retirement income vehicle. 
  • Calculate the withholding tax for a cash withdrawal from a locked-in retirement income vehicle. 
  • Explain how taxes payable on a cash withdrawal from a locked-in retirement income vehicle may differ from the withholding taxes collected by a financial institution. 
Additional Knowledge Expected of CFP Professionals
  • Estimate the tax impact resulting from a cash withdrawal from a locked-in retirement income vehicle.
  • Calculate the impact on current and projected net worth of a withdrawal from a locked-in retirement income vehicle.

 

REFERENCES

1 https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/making-withdrawals/tax-rates-on-withdrawals.html 
Arrow Left previous / Locked-In Retirement Income Vehicles Attributes
next / Locked-In Retirement Income Vehicles Transfers Arrow Right