IFSE Institute LLQP Exam - Topic 1 Question 4 Discussion

Actual exam question for IFSE Institute's LLQP exam

Question #: 4
Topic #: 1

[All LLQP Questions]

Lily works for Cloud 9 Inc. She earned $120,000 in Year 1 and $125,000 in Year 2. Lily contributes 5% of her income into a defined contribution pension plan (DCPP), and this contribution is matched by the employer. Lily has unused contribution room of $15,000 and wants to know how much she can contribute to her registered retirement savings plan (RRSP) in Year 2.

A$24,600

B$25,000

C$30,600

D$31,250

Show Suggested Answer

Suggested Answer: A

Lily's RRSP contribution room is reduced by her DCPP contributions. Her total income for Year 2 was $125,000, and she contributed 5% ($6,250) to the DCPP, matched by the employer, for a total of $12,500. The Pension Adjustment (PA) for her DCPP contribution would be $12,500, which reduces her RRSP contribution room.

Calculation:

RRSP limit based on previous year's income (18% of $120,000): $21,600

PA reduction: $12,500

Remaining RRSP contribution room for Year 2: $21,600 - $12,500 = $9,100

Including her unused contribution room: $9,100 + $15,000 = $24,100

So, Lily can contribute $24,600 to her RRSP in Year 2.

by Michel at Oct 19, 2024, 12:31 AM

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Brianne

3 months ago

I thought it was lower than that.

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Donte

4 months ago

Don't forget the employer match!

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Colton

4 months ago

Wait, how did you get that number?

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Lizbeth

4 months ago

That sounds about right!

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Bambi

4 months ago

Lily can contribute up to $31,250 in Year 2.

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Sabrina

5 months ago

I believe the total contribution limit includes both the DCPP and the RRSP, so I might lean towards option C, but I need to double-check the calculations.

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Devorah

5 months ago

I practiced a similar question where we had to calculate the total contribution room, and I think it was around 18% of the income, but I’m not confident about the exact numbers.

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Jacqueline

5 months ago

I think the unused contribution room of $15,000 plays a big role here, but I can't recall how it combines with the income percentage.

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Alva

5 months ago

I remember that the RRSP contribution limit is based on a percentage of earned income, but I’m not sure how to factor in the DCPP contributions.

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Merilyn

5 months ago

This seems pretty straightforward. I just need to calculate Lily's total income, her DCPP contributions, and then add the unused RRSP room to get the total amount she can contribute to her RRSP.

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Gregoria

5 months ago

Okay, let's break this down step-by-step. Lily earned $120,000 in Year 1 and $125,000 in Year 2. She contributes 5% of her income to the DCPP, which is matched by her employer. And she has $15,000 in unused RRSP contribution room. I think I can figure this out.

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Britt

5 months ago

Hmm, I'm a bit confused about the DCPP contribution and how that affects the RRSP contribution. I'll need to make sure I understand the relationship between the two.

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Wayne

5 months ago

This looks like a straightforward calculation problem. I'll need to figure out Lily's total income, her DCPP contributions, and her unused RRSP contribution room.

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Jettie

1 year ago

Hmm, this question is making my brain hurt. Maybe I should have paid more attention in my accounting class. But hey, at least Lily has a good problem to have - she's got a decent income and can contribute to her retirement plan. I'm going to go with B) $25,000, just because it sounds like a nice round number.

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Ashlyn

1 year ago

D) $31,250

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Rosalyn

1 year ago

C) $30,600

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Jovita

1 year ago

B) $25,000

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Shanice

1 year ago

A) $24,600

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Renay

1 year ago

Whoa, this question is like a math puzzle! I'm going to go with C) $30,600. Lily's income in Year 2 was $125,000, and she contributes 5% of that, which is $6,250. Plus the $15,000 in unused contribution room, that's $21,250. And then the employer match brings it up to $30,600. I think that's the right answer!

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Alisha

1 year ago

Great job on solving the math puzzle! C) $30,600 is indeed the correct amount Lily can contribute to her RRSP in Year 2.

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Long

1 year ago

That makes sense! Lily's contributions plus the unused room and employer match add up to $30,600.

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Natalie

1 year ago

I think you're right! C) $30,600 seems to be the correct answer based on the information provided.

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Barrett

1 year ago

This is a tricky one, but I'm pretty sure the correct answer is D) $31,250. Lily's income in Year 2 was $125,000, and she contributes 5% of that, which is $6,250. Add the $15,000 in unused contribution room, and you get $31,250.

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Brice

1 year ago

She contributes 5% of that, which is $6,250.

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Rusty

1 year ago

Adding the $15,000 in unused contribution room, the total is $31,250.

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Janella

1 year ago

That makes sense, Lily's income in Year 2 was $125,000.

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Sharmaine

1 year ago

I think the answer is D) $31,250.

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Luann

1 year ago

Wait a minute, I think the answer is B) $25,000. Lily's income in Year 2 was $125,000, and she contributes 5% of that, which is $6,250. With the $15,000 in unused contribution room, the total comes to $25,000.

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Merrilee

1 year ago

Hmm, let's see. Lily has $15,000 in unused contribution room, and she contributes 5% of her income to her DCPP, which is matched by her employer. I think the answer is C) $30,600.

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