LIRA: Locked-in Retirement Accounts | National Bank (2024)

FAQs

How do I unlock my LIRA early? ›

Generally speaking the only way to get money out of your locked in accounts is to retire. In most cases, the earliest age you can access pension money is age 55 (Some situations allow for access to funds before the age of 55 – see below).

Age 55 and over - One-time 50% unlocking:

they may transfer 50% of the funds in their RLIF into an RRSP or an RRIF. Cash can then be withdrawn, from either of these vehicles, subject to any applicable income tax rules. The funds cannot be taken directly in cash from an RLIF.

Pension funds in a LIRA cannot be withdrawn early except under a very few circ*mstances, and the money cannot be used as anything other than income for your retirement once you reach 55 years of age.

At retirement, the money in an LIRA can be transferred to another retirement fund or used to purchase a life annuity. Locked-in Retirement Accounts are governed by provincial pension laws. Federal pension laws govern a similar type of account known as a locked-in Registered Retirement Savings Plan (RRSP).

Understanding 401(k) Hardship Withdrawals

Immediate and heavy expenses can include the following: Certain expenses to repair casualty losses to a principal residence (such as losses from fires, earthquakes, or floods) Expenses to prevent being foreclosed on or evicted. Home-buying expenses for a principal residence.

A plan distribution before you turn 65 (or the plan's normal retirement age, if earlier) may result in an additional income tax of 10% of the amount of the withdrawal.

50% unlocking: Depending on your jurisdiction, you may qualify to unlock up to 50% of your LIRA funds and transfer them to a registered retirement savings account (RRSP).

Unlike RRSPs, it is not possible to withdraw funds from a LIRA. The exceptions to this are death, reduced life expectancy and non-residence in Canada for two years.

Unlocking once you've hit age 55

For example, if the funds in your LIRA came from a pension plan that is regulated under the federal rules, and you are 55 or older, you can convert your LIRA to a LIF, and then unlock up to 50 per cent of the amount in the LIF to a tax-deferred account, such as an RRSP.

If the LIRA owner or their spouse has received a written demand with respect to a default on a debt that is secured against the LIRA owner's or the spouse's principal residence, and the LIRA owner or spouse could face eviction or legal action if the amount in default remains unpaid, the LIRA owner could apply to unlock ...

Can I transfer my LIRA to another institution? ›

Funds may be transferred from a LIRA to: • an RPP (if that plan so permits); • another LIRA (same or different financial institution); • a LIF; or • an insurance company authorized to issue annuity contracts in Canada to purchase a life annuity.

Key Takeaways. Funds held in qualified ERISA plans, such as a 401(k) or pension plan, are generally protected from creditors.

If you choose to transfer the commuted value to a personal LIRA, under the Income Tax Act, the maximum allowed as a direct transfer will be $253,800 (27,000 x the factor of 9.4).

What happens when you retire? When you retire, or when you reach a certain age, the money you've saved will need to turn into retirement income. You can do that by turning your LIRA into a life annuity, a life income fund (LIF), or another retirement income plan available to you.

to issue a LIRA and to convert a LIRA to a LIF. A one-time unlocking of the fund up to 50% is permitted within 60 days after receiving funds in a new LIF. If the annuitant is facing financial hardship, which is defined in the governing legislation, up to 50% of YMPE can be withdrawn at any age, once per year.

By law, you may keep your LIRA until the end of the year in which you turn 71, then, you must convert it. You will then have two options: a Life Income Fund or a life annuity. People are retiring earlier these days, often at age 55.