Question

Which of the following statements with respect to Registered Retirement Income Funds (RRIFs) is correct? An...

Which of the following statements with respect to Registered Retirement Income Funds (RRIFs) is correct?

An individual can make non-deductible contributions to a RRIF.

Earnings accumulate within the RRIF on a tax free basis.

A RRIF can only be established by individuals over the age of 71.

The minimum annual withdrawal from a RRIF is always determined by dividing the fair market value of the assets in the plan by 90, less the age of the beneficiary at the beginning of the year
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Answer #1

1.Correct answer -Earnings accumulate within RRIF on tax free basis , since it is only at the time of withdrawal tax arises.

2.Contibutions made to RRSP are deductible in nature.RRSP converts into RRIF when the individual turns 71.Contributons are made to RRSP account hence the statement that individual can make non dedcutible contribution to RRIF is wrong (the statement that it being non deductible is also wrong)

3.RRIF should be established before the individual turns 71 hence the statement saying it can be established by individuals over the age of 71 is wrong

4.The minimum annual withdrawal from RRIF is determined by multiplying fair market value of the asset with 1 / 90 - age of beneficiary at the begining of the year).

RRSP = Registered retirement savings plan

RRIF = Registered retirement income fund

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