Segregated Funds & Annuities Mock Exam Study Guide with Complete Solutions!

Group Registered Retirement Savings Plan (GRRSP) - ANSWER-GRRSPs offer investors a limited variety of investment choices, but they have lower fees compared with individual RRSPs. Cancellation of Segregated Fund Contract - ANSWER-An investor may cancel or rescind the segregated fund contract in writing within the specific time limitation set by the insurer providing the contract. Two days is the usual length of time permitted. The investor receives the lesser of the amount of premium paid or value of fund units on that date if it is a valuation date. If it is not a valuation date, then the value on the next valuation date applies. Advanced Deferred Life Annuity (ADLA) - ANSWER-A lifetime limit of 25% of the value of the qualifying plan, to a total of $150,000 applies to ALDA purchases. The ALDA has the ability to defer payments until the end of the year in which the annuitant reaches 85. Therefore, the ALDA addresses longevity risk and ensures that investors with an RRIF do not deplete their savings prematurely during retirement. Defined Contribution Pension Plan (DCPP) - ANSWER-Because the money in the DCPP is locked in, it can only be transferred into another locked-in account or left in the current DCPP. A variable payment life annuity is an option for members of a DCPP. Registered Retirement Investment Fund (RRIF) - ANSWER-The minimum percentage of an RRIF account that must be withdrawn yearly starts at age 65 and extends until age 95. The percentage range starts at 4% at age 65 and goes to 20% at age 95. (4.7.2) Group Savings Plans - ANSWER-Groups that offer savings and investment plans to their members include employers, associations, and fraternal organizations. Group plans are most often associated with employers. The six fundamental types of group savings plans are: Defined benefit pension plan (DBPP) Defined contribution pension plan (DCPP) Group registered retirement savings plan (GRRSP) Deferred profit sharing plan (DPSP) Tax-free savings account (TFSA) Pooled registered pension plan (PRPP) Deferred Profit Sharing Plan (DPSP) - ANSWER-Deferred Profit Sharing Plan (DPSP) cannot be