Lydia wants to transfer units of her Sussex Growth Fund to her registered retirement savings plan (RRSP) as her RRSP contribution. The current market value is $10,600 and the cost of the units is $4,500.
Which of the following statements is CORRECT?
A.
Lydia is only permitted to contribute cash to her RRSP not units of her mutual fund.
B.
Lydia's RRSP contribution will be valued at $4,500.
C.
Lydia's RRSP contribution will be valued at $10,600.
D.
Lydia will incur a capital gain of $4,500 from the contribution.
Lydia can make an in-kind contribution of her mutual fund units to her RRSP, as long as the fund is eligible for RRSPs. The value of her contribution will be based on the fair market value of the units at the time of the transfer, which is $10,600. However, she will also trigger a deemed disposition of the units and realize a capital gain of $6,100 ($10,600 - $4,500), which is taxable in the year of the transfer.
References = Canadian Investment Funds Course (CIFC) - Module 3: Registered Plans - Section 3.1: Registered Retirement Savings Plan (RRSP)1 and web search results from search_web(query="RRSP contribution in kind")
Contribute your Thoughts:
Chosen Answer:
This is a voting comment (?). You can switch to a simple comment. It is better to Upvote an existing comment if you don't have anything to add.
Submit