Chartered Investment Manager (CIM) Practice Exam · Question
Which of the following is a key characteristic of a Canadian 'Registered Retirement Savings Plan' (RRSP)?
An RRSP allows contributions to be deducted from taxable income, and investments held within the plan grow tax-deferred until funds are withdrawn, usually in re
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Question: Which of the following is a key characteristic of a Canadian 'Registered Retirement Savings Plan' (RRSP)?
Answer options:
- Contributions are tax-deductible, and investment income is taxed annually.
- Contributions are taxed, and withdrawals in retirement are tax-free. ✅ Contributions are tax-deductible, and investment income grows tax-deferred until withdrawal.
- Contributions are not deductible, and all withdrawals are tax-free.
Correct answer: Contributions are tax-deductible, and investment income grows tax-deferred until withdrawal.
Explanation: An RRSP allows contributions to be deducted from taxable income, and investments held within the plan grow tax-deferred until funds are withdrawn, usually in retirement.
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