knowledge topics
Locked-In Retirement Income Vehicles Attributes
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- Define a locked-in retirement income vehicle.†
- Explain for whom a locked-in retirement income vehicle may be suitable.
- Identify the legislation relevant to a locked-in retirement income vehicle.
- Federal Income Tax Act
- Pension legislation for the jurisdiction in which the plan operates
- Identify where legislation related to locked-in retirement income vehicles may differ across jurisdictions, such as:
- Plan criteria
- Transfers
- Withdrawals
- Minimum amounts
- Maximum amounts
- Unlocking provisions
- Spousal consent requirements
- Identify the jurisdiction of a locked-in retirement vehicle.
- Identify qualified investments as prescribed by the Canada Revenue Agency that may be held in a locked-in retirement income vehicle.1
- Identify non-qualified investments as prescribed by the Canada Revenue Agency that may not be held in a locked-in retirement income vehicle.2
- Explain the tax that may be imposed by the Canada Revenue Agency when a locked-in retirement income vehicle contains a non-qualified investment.3
- Identify prohibited investments as prescribed by the Canada Revenue Agency that may not be held in a locked-in retirement income vehicle.4
- Explain the tax that may be imposed by the Canada Revenue Agency when a locked-in retirement income vehicle contains a prohibited investment.5
- Explain advantages and disadvantages associated with a locked-in retirement income vehicle.
- Define the parties to a locked-in retirement income vehicle.
- Annuitant
- Beneficiary
- Issuer/Provider
- Successor annuitant
- Explain the role of each of the parties to a locked-in retirement income vehicle.
- Explain how a locked-in retirement income vehicle is funded.
- Explain how income earned within a locked-in retirement income vehicle is treated for tax purposes.
† The term locked-in retirement income vehicle is used to denote Life Income Funds (LIF) and Restricted Life Income Funds (RLIF). The regulations required of all locked-in retirement income vehicles plans follow similar regulations across jurisdictions with variations related to each jurisdiction’s pension legislation. Unless otherwise noted, where locked-in retirement income vehicle is used throughout this document it may be taken to mean one of these plans or a similar vehicle that meet the requirements of a registered plan under the Federal Income Tax Act and the pension legislation of the jurisdiction in which the plan is available. Such plans may include Locked-in Retirement Income Funds (LRIF) and Prescribed Registered Retirement Income Funds (PRRIF).
Glossary of Verbs (mouse over to see definition)
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a judgement through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
Read more about the Taxonomy used in the FP-BoK
REFERENCES
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/glssry-eng.html#qualified
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/glssry-eng.html#nonqualified
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ntvdnc/nnqlfdnvst-eng.html
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/glssry-eng.html#prohibited
- http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ntvdnc/prhbtnvst-eng.html
