If you have a disability that reduces your life expectancy, you are entitled to a refund in whole or in part of the balance of your locked-in retirement account (LIRA).
You can apply for the refund until the end of the year during which you turn 71.
To obtain a refund, you must provide the financial institution holding your LIRA with a medical certificate stating that your physical or mental disability reduces your life expectancy.
The refund can be made in one or more instalments.
The refund is taxable. You could pay income taxes at a later time if the balance can be transferred directly to an RRSP. For more information, consult the Canada Revenue Agency's website.
You are entitled to the refund, even if your investments have not matured. However, penalties could apply.
Refunding the balance of your LIRA could also be made in other situations.
To be entitled to the refund of the balance of your LIRA in the event of disability, you must meet the following two conditions:
You have a physical or mental disability.
If your health problems do not affect your ability to work, you cannot be deemed to be disabled.
Your disability reduces your life expectancy.
Reduced life expectancy does not necessarily mean that the reduction must be significant.
The financial institution cannot impose other conditions.
Even if you are entitled to the refund of the balance of your LIRA in the event of disability, you might not be entitled to a disability pension under the Québec Pension Plan. Each plan, contract or program has its own definition of disability.
Check the conditions that apply to each one to find out what you can receive.
Your medical certificate must be issued by a physician who is a member of the Collège des médecins du Québec or a member of an equivalent body.
The certificate does not have to mention the diagnosis received or your life expectancy. It merely has to state that your physical or mental disability reduces your life expectancy. It can be a letter signed by your physician, as in the following example:
Your life income fund (LIF) provides nothing in the event of disability. However, you can transfer the balance of the LIF to an LIRA to benefit from the measures provided by the LIRA. You must do so before the end of the year during which you turn 71.
