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Locked-In Retirement Savings Vehicles Attributes
KNOWLEDGE EXPECTED OF: Both CFP® Professionals and QAFPTM Professionals
- Define a locked-in retirement savings vehicle.†
- Identify the legislation relevant to a locked-in retirement savings vehicle.
- Federal Income Tax Act
- Pension legislation for the jurisdiction in which the plan operates
- Identify where legislation related to locked-in retirement savings 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 savings vehicle.
- Identify qualified investments as prescribed by the Canada Revenue Agency that may be held in a locked-in retirement savings vehicle.1
- Identify non-qualified investments as prescribed by the Canada Revenue Agency that may not be held in a locked-in retirement savings vehicle.2
- Explain the role of each of the parties to the locked-in retirement savings vehicle.
- Explain the tax that may be imposed by the Canada Revenue Agency when a locked-in retirement savings 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 savings vehicle.4
- Explain the tax that may be imposed by the Canada Revenue Agency when a locked-in retirement savings vehicle contains a prohibited investment.5
- Explain advantages and disadvantages associated with locked-in retirement savings vehicles.
- Define the parties to each of the locked-in retirement savings vehicles.
- Annuitant
- Beneficiary
- Issuer/Provider
- Successor annuitant
- Explain the role of each of the parties to the locked-in retirement savings vehicle.
- Explain how a locked-in retirement savings vehicle is funded.
- Explain how income earned within a locked-in retirement savings vehicle is treated for tax purposes.
† The term locked-in retirement savings vehicle is used to denote Locked-In Retirement accounts (LIRAs), Locked-In Registered Retirement Saving Plans (LRSPs) and Restricted Locked-In Savings Plans (RLSPs). The regulations required of both LIRAs and LRSPs are very common, with the difference in nomenclature being subject to the province or territory in which the plan is available. The regulations required of all plans follow similar regulations across jurisdictions with variations related to each jurisdiction’s pension legislation. Unless otherwise noted, where “locked-in retirement savings 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.
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
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