If you are in a registered pension plan with your employer and leave that company, your pension will be transferred into a Locked-In Retirement Account (LIRA). Locked-In Retirement Accounts are sometimes referred to as the more appropriate name of Locked-In Retirement Savings Plans (LRSP).
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LIRAs are similar to an RRSP, but as the name suggests, are locked-in until retirement. Also note that once the plan is converted to a Locked-In Retirement Account, you cannot make further contributions to it.
Once you reach retirement or turn 71 you are required to convert your LIRA to either a life annuity, Life Income Fund (LIF), Locked-In Retirement Income Fund (LRIF) or a Prescribed Registered Retirement Income Fund (PRRIF).
There are some exceptions that might allow you to access the money in your Locked-In Retirement Account before retirement. While the rules can vary from province to province, generally they include reduced life expectancy, unemployment or low income, balances below a certain amount, and those that will become a non-resident of Canada.
While a Locked-In Retirement Account has many restrictions, it could help to protect the pensions of those who change careers a few times throughout their life.
What Is A Locked-In Retirement Account (LIRA)?,Related Posts:
Tom Drake is the owner and head writer of Canadian Finance Blog.
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I’m looking at leaving my current employer where I have been paying into a pension. As a result, to transfer my pension away from the corporate pension I must convert to a locked in RRSP or LIRA or pay tax on bringing the money out. The bad thing about converting to a LIRA is that you are not eligible to use those funds to participate in the Home Buyers Plan. What a shame!
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I have a locked in retirement account, I need to access the funds. I am not and have never been a Canadian citizen. I used to be employed in Canada which is my only ties to this country. I am only 32yrs old, I am in the worst financial state I have ever experienced. Can someone out there help me?
I am about to put my pension in a LIRA. My plan is to have a financial analyst to manage part of it, and myself to manage the rest. Question is can I split the LIRA into multiple LIRA accounts under different management ? Thanks.
Ron – there is some hope – see http://www.taxtips.ca/pensions/rpp/unlockingrpp.htm
since you are not a resident and the amount may be lower than threshhold.