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Locked-in retirement accounts (LIRAs) and life income funds (LIFs)

The applicable law is determined by the origin of the amounts in the LIRA or LIF.

The LIRA is used to save money for retirement. To obtain money from an LIRA, it must first be transferred to a life income fund (LIF). However, under certain circumstances (disability, non-resident of Canada, age 65 or older, or death), it is possible to obtain a refund.

For certain transactions regarding LIRAs and LIFs, the holder may have to use one of the schedules from the Regulation respecting supplemental pension plans.

The LIF provides an income for life, that is, a retirement income until the holder's death. It also provides the option of a temporary income. At the beginning of each year, the financial institution calculates the maximum and minimum amounts that can be withdrawn from the LIF during the year. It is possible to get an estimate of the life income or temporary income that can be drawn using LIF Quick Calc, a calculator available as part of our online services. Under certain circumstances (non-resident of Canada, age 65 or older, or death), it is possible to obtain a refund of an LIF.

Tax

Amounts withdrawn from an LIF are taxable. Amounts transferred to a registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) are not taxable until they are withdrawn.

For certain transactions regarding LIRAs and LIFs, the holder may have to use one of the schedules from the Regulation respecting supplemental pension plans.

If the financial institution pays :

  • amounts from a LIRA that it should not have paid
    • OR
  • income from an LIF greater than the maximum permitted

The holder is not required to repay the amounts to the financial institution, unless the overpayment is the result of a false declaration. In addition, the holder can require the financial institution to pay him or her a penalty equivalent to the overpayment.

If the amounts come from a plan subject to the Supplemental Pension Plans Act :

  • Most of the time they cannot be seized. The Code of Civil Procedure (R.S.Q., chapter C-25.01) may however provide for certain exceptions.

If the amounts come from a public-sector pension plan (e.g., RREGOP, PPMP, etc.) :

  • They can be seized if there has been no bankruptcy or, if there has been bankruptcy and the amounts were paid into an LIRA or LIF in the 12 months preceding the bankruptcy.
  • They cannot be seized if the amounts were paid into an LIRA or LIF more than 12 months preceding the bankruptcy.
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