Locked-in retirement accounts (LIRAs) and life income funds (LIFs)
When a locked‑in retirement account (LIRA) or a life income fun (LIF) holder dies, the balance in the LIRA or the LIF is no longer locked-in and will be paid to the spouse base on the applicable conjugal status. However, if he or she has renounced it of if the deceased member did not have a spouse, the balance will be paid to the heirs.
At the time of the holder's death, if amounts resulting from the breakdown of a union had been transfered in a LIRA or a LIF, those amounts will only be paid to the new spouse of the contract so provides.
To receive payment of the death benefit, an application must be filed with the financial institution that administers the LIRA or the LIF.
The amounts withdrawn are subject to income tax. However, income tax can be deferred by transferring the amount directly to a registered retirement savings plan (RRSP) or to a registered retirement income fund (RRIF). For information on this subject, please consult the Canada Revenu Agency website or call 1 800 959-7383.
Renunciation and revocation
At the time of the holder's death, the spouse can renounce his or her right to receive the balance of the LIRA or the LIF, unless he or she has already received it.
The spouse can:
- renounce payment of the balance after the holder's death, provided the amounts have not yet been paid. A written notice of renunciation must be provided to the financial institution.
- revoke his or her renunciation by contacting the financial institution in writing, provided he or she does so before the holder's death.
Despite the provisions of the deceased person's will, the balance of the LIRA or LIF will be paid according to the rules explained above. Those rules take precedence over the will.
A helpful example...
George marries his second wife, Margaret. In his will, George bequeathed the amounts in his LIRA to his children from his first mariage.
If Margaret has not renounced her right to receive the balance of the LIRA at the time of George's death, despite the provisions of George's will, the financial institution must pay her the amounts including interest, in accordance with the rules listed above.
However, Margaret must contact the financial institution in writing if she wishes to renounce her right to receive the balance of the LIRA, provided the amounts have not yet been paid. The financial institution will then pay the balance of the LIRA including interest to George's children, according to the rules listed above and the provisions of George's will.
What are the first steps to take in the event of death?
Following the death of a family member, it is important to notify Retraite Québec as soon as possible. Consult our Action to take in the event of death section for further information.
Other useful links