Characteristics of a locked-in retirement account (LIRA)

A locked-in retirement account (LIRA) is an instrument that allows savings for retirement to grow. A person can transfer amounts to it from:

  • a supplemental pension plan (often called pension plan);

    The supplemental pension plan may be subject to the Supplemental Pension Plans Act (e.g.: pension plan in the private, municipal or university sector of Québec) or established by an Act or a government (e.g.: Government and Public Employees Retirement Plan (RREGOP)).

  • a locked-in voluntary retirement savings plan (VRSP) account;
  • a life income fund (LIF);
  • an annuity contract;
  • another LIRA.

Amounts in an LIRA are locked-in, which means that amounts in an LIRAcannot be withdrawn. They must serve to generate retirement income by transferring the amounts into an LIF or by purchasing a life annuity.

Exceptions

Amounts in an LIRA can be withdrawn only:

An LIRA can be offered by any financial institution qualified to offer a registered retirement savings plan (RRSP). The list of Financial Institutions Offering LIRAs and LIFs can be consulted on Retraite Québec's website.

Deadline to hold an LIRA

A person can hold an LIRA until 31 December of the year during which he or she turns 71. The LIRA balance must be transferred to a life income fund (LIF) or be used to purchase a life annuity from an insurer not later than on that date.

Transfers related to an LIRA

A person can transfer:

  • the balance of his or her LIRA to another LIRA, to change financial institutions, for example;
  • amounts from his or her LIRA to an insurer to purchase a life annuity;
  • amounts from his or her LIRA to an LIF to draw a retirement income;
  • amounts from his or her LIRA to a supplemental pension plan to buy back years of credited service provided that the plan allows those years to be bought back;
  • the balance of his or her LIF to his or her LIRA, to postpone payment of a retirement income or to obtain an LIRA refund.

It is only when investments come to maturity that a transfer can be made. However, the contract entered into with the financial institution can allow the transfer to be made before the investments have come to maturity. In that case, penalties or fees may be required depending on the contract.

A person cannot transfer amounts:

  • from his or her registered retirement savings plan (RRSP) or from his or her registered retirement income fund (RRIF) to his or her LIRA;
  • from his or her LIRA to his or her RRSP or RRIF.
Exceptions for
LIRA refund situations

An LIRA refund is taxable. Income tax can be deferred if the amounts can be transferred directly to an RRSP or an RRIF. For more information, contact the Canada Revenue Agency by consulting the Transferring  section of their website or by calling 1 800 959‑7383.

How can a retirement income be drawn?

An LIRA is not used to pay an income, because it is intended to accumulate retirement savings. To receive a retirement income, a person must transfer his or her LIRA balance:

  • to an LIF (life income fund);
  • with an insurer to purchase a life annuity.

There is no minimum age to make such a transfer. However, a person must transfer his or her LIRA balance not later than on 31 December of the year during which he or she turns 71, which is the deadline to hold an LIRA.

It is only when investments come to maturity that a transfer can be made. However, the contract entered into with the financial institution can allow the transfer to be made before the investments have come to maturity. In that case, penalties or fees may be required depending on the contract.

Amounts paid by mistake from an LIRA

The holder of an LIRA does not have to remit the amounts that were paid to him or her by mistake from his or her LIRA to the financial institution.

Unless the holder of an LIRA has made a false declaration, he or she may require that the financial institution pay him or her a penalty equal to the amounts paid by mistake.

The financial institution is not required to carry out an investigation to verify the information provided by the holder of an LIRA, unless information that contradicts the declarations provided has been brought to its attention.

Any questions?

You can contact the financial institution that manages your LIRA for information concerning your personal data, since Retraite Québec does not have access to that information.

For other information, you can contact Retraite Québec.

Legal references

Other useful information