Which of the following statements about the growth of investments in a registered retirement income fund (RRIF) is TRUE?

The correct answer highlights that the growth of investments within a registered retirement income fund (RRIF) is indeed tax-sheltered. This means that any income generated from the investments—such as dividends, interest, and capital gains—does not incur immediate tax liability while it remains within the RRIF, allowing the investments to compound without being reduced by taxes each year.

This tax-deferral feature is significant as it can result in a larger accumulation of wealth over time, compared to a taxable account where investment growth would be taxed annually. In a RRIF, taxes are only triggered when funds are withdrawn, which offers flexibility and potential tax advantages depending on the individual's retirement income strategy.

In contrast, the other options suggest different tax treatments that do not align with how RRIFs function. For example, stating that growth is subject to yearly taxation contradicts the fundamental benefit of tax-sheltered growth in such accounts. Similarly, saying that growth is taxed only upon withdrawal does not emphasize the key benefit of tax-sheltering during the accumulation phase, while claiming that growth is exempt from taxes overlooks the tax implications that occur upon actual withdrawal of those funds. Thus, the understanding of tax-sheltering within a RRIF is crucial for effective retirement planning.