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Financial Services: Locked-in Retirement Funds & Account Advice with LMBF

In Canada, a locked-in retirement account (or LIRA) is essentially a pension savings account, designed to hold funds until withdrawal upon retirement. There are few exceptions to the withdrawal rule, such as if you are suffering from high medical or disability costs, your life expectancy has been shortened drastically, you have been evicted from a rental, or if you are permanently leaving Canada. All locked-in retirement account plans are governed by provincial or federal pension legislation, so there may be different rules on how you can withdraw from your locked-in retirement funds in order to comply with regulations. LMBF is here to provide you the advice you need on how best to utilize a locked-in retirement account, and if a LIRA is the right investment choice for you.

The Benefits of LMBF’s Locked-in Retirement CRA Services

Tailored Advice

Tailored Advice

Your retirement needs may look very different than the next individual’s; your financial needs, future plans, and your current income may vary, which is why you need tailored advice from some of Canada’s top financial advisors. LMBF is here to help.

Investment Solutions

Investment Solutions

Depending on your retirement needs, LMBF’s financial advisors are here to provide you with investment solutions that will help you to easier meet your future financial goals. They may offer you advice on transferring funds between accounts or whether to purchase a life annuity, depending on your current stage of life.

  Reasons to need an LIRA in Canada
  • You want pension for life after retirement
  • You want stability for a surviving spouse
  • You want the flexibility to transfer to another retirement fund, if need be
  Ways that an LIRA may benefit you
  • Holds transferred funds from existing pension plans
  • Funds may be split between named beneficiaries
  • Funds can be transferred to another retirement account
  • Pension for life after retirement

What is a locked-in retirement account?

A locked-in retirement account (sometimes abbreviated to LIRA) is a type of registered savings account in Canada that does not allow any withdrawals prior to retirement, besides a few outstanding exceptions. Locked-in retirement accounts are designed to hold pension funds for individuals who were formerly plan members and spouses - exes, or surviving. Upon reaching retirement age, the plan beneficiary receives pension for life.

Our Locked-in Retirement Account Advisors

When it comes to retirement, there are many different choices. If you have left your job, you may create a locked-in retirement account to hold your pension funds until retirement. However, there are still many choices to be made with your locked-in retirement funds, like if you wish to transfer to a separate retirement savings account later in life, purchase a life annuity, and more. LMBF’s advisors are here to help give you options based on your living circumstances.

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Looking to Get Started on Your Locked-in Retirement Account in Canada? Get Started By Discussing With LMBF’s Financial Advisors.

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Locked-in Retirement Funds in Canada: Some Frequently Asked Questions

A: Only upon withdrawal may half of the money in your locked-in retirement account be transferred into an RRSP. You also have the option of using the money in your LIRA to purchase a life annuity contract, which then permits you to to have a guaranteed fixed income for the rest of you and/or your named beneficiary’s lives.

A: enerally, the accepted age for unlocking 50% of a person’s locked-in retirement funds is 55 or older. At that point, the person may decide to transfer up to 50% of their savings into another savings vehicle, such as an RRIF or an RRSP.

A: LIRAs are considered locked, meaning that the holder may not withdraw or use funds, whereas RRSPs have more freedom with how the holder can use funds (although there are still some restrictions.) Both accounts must be opened before 71, but a LIRA only defers taxes until the moment is withdrawn. On the other hand, RRSPs will overall reduce a holder’s income tax. Also, note that LIRAs fall under provincial jurisdiction and RRSPS fall under federal jurisdiction.

A: Locked-in retirement accounts have specific minimum withdrawals, similar to other retirement savings accounts. They must begin no later than the age of 72, and there will be maximum withdrawals per year that cannot begin before age 55. The minimum/maximum withdrawal amount will be a certain percentage of the overall account value, determined by the government on the prior Dec. 31.

A: Locked-in retirement accounts can be withdrawn from prior to retirement due to a number of outstanding circumstances in the account holder’s life. Some circumstances include eviction from a rental, low income, disability or medical costs, etc. - so certain financial hardships will certainly qualify for early withdrawals.

A: You are allowed to keep your locked-in retirement funds until the end of the same year that you turn 71, and then you are required to convert it. You have two options: a life income fund or a life annuity. An LMBF advisor can help narrow down your choices based on your circumstances.