Mich$$le$,$ age $63,$ received a severance package of $$50,000$ when she retired.

She wants to use the money to purchase a term$-$to$-$age$-90$ annuity that will

provide her with an immediate income stream. Since she didn't always make

the maximum allowable RRSP contributions, Mich$$le has a lot of contribution

room. Her life insurance agent therefore advises her to invest the $$50,000$ in

her RRSP and then to create a registered annuity with this amount. The RRSP

contribution is tax$-$deductible.

How will the annuity payments made to Mich$$le be treated from a tax

perspective?

All the annuity payments will be tax$-$exempt.

Only the payments made before Mich$$le turns $71$ will be tax$-$exempt.

Only the payments made after Mich$$le turns $71$ will be tax$-$exempt.

All the annuity payments made to Mich$$le will be taxable.