Characteristics of a life income fund (LIF)
A life income fund (LIF) is a withdrawal instrument that allows to draw a retirement income. A person can transfer amounts from:
An LIF can be offered by any financial institution qualified to offer a registered retirement income fund (RRIF). The list of Financial Institutions Offering LIRAs and LIFs can be consulted on Retraite Québec's website.
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Transfers related to an LIF
An LIF to another LIF
A person can transfer his or her LIF balance to another LIF, to change financial institutions for example.
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.
Warning for persons under age 55
Amounts transferred from an LIF to another LIF can provide life income only as of the year following the year of the transfer. The person must ensure to draw a life income from the first LIFbefore making the transfer if he or she would like to receive a life income.
Amounts transferred from the first LIF can however be used for payment of a temporary income during the year of the transfer if the person meets the required conditions to be entitled to a temporary income.
An LIF to an LIRA
A person can transfer his or her LIF balance 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 his or her LIF balance to his or her LIRAafter 31 December of the year during which he or she turns 71, because that is the deadline to hold an LIRA.
An LIF to a supplemental pension plan
A person can transfer amounts from his or her LIF to a supplemental pension plan to buy back years of credited service provided that the provisions of the plan allow those years to be bought back.
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.
An LIF to an annuity contract
A person can transfer amounts from his or her LIF with an insurer to purchase a life annuity.
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.
An LIF to an RRSP, an RRIF or a not locked-in voluntary VRSP account
A person cannot transfer amounts from his or her LIFdirectly to a registered retirement savings plan (RRSP), a registered retirement income fund (RRIF) or to a not locked-in voluntary retirement savings plan (VRSP) account since 1 January 2025.
An RRSP or an RRIF to an LIF
A person cannot transfer amounts from his or her registered retirement savings plan (RRSP) or registered retirement income fund (RRIF) to his or her LIF.
Minimum withdrawal from an LIF
The holder of an LIF must withdraw each year a minimum amount from his or her LIF.
The minimum is equal to the minimum amount of an RRIF prescribed under taxation rules 
.
The minimum is $0 the year in which the LIF is opened.
Income from an LIF for persons under age 55
Income that a person under age 55 can withdraw from his or her LIF is:
- a life income;
- a temporary income, if the LIF provides that option.
Cashed amounts from an LIF are taxable.
At the beginning of each year, a financial institution that manages an LIF provides its holder with a statement indicating the LIF balance, the payable income and the applicable payment methods.
A person under age 55 can use the LIF Quick Calc service to find out the life income or temporary income that can be withdrawn from his or her LIF in the year.
A person who wants to benefit from a life income or temporary income must file an application with the financial institution that manages the LIF.
Life income for persons under age 55
A life income is retirement income that a person can withdraw from his or her LIF, every year, for life. A person can apply for it at any age.
The life income can vary annually. It must be at least equal to the minimum amount prescribed under the taxation rules. It must not exceed a maximum amount.
The upper limit of the annual life income, without requesting a temporary income, is calculated based on the LIF balance on 31 December or 1 January, and on a prescribed rate. It is the result of the following equation:
Upper limit of the life income = (Prescribed rate) × (LIF balance on 31 December or 1 January)
A person who requests an amount lower than the upper limit of the life income to which he or she is entitled for the year can request, at any time during the year, payment of the balance of the life income to which he or she is entitled. However, the person cannot request an amount to which he or she would have been entitled for a previous year.
A person can receive a life income in one or more instalments during the year. However, the frequency can be set in the contract entered into with the financial institution.
Temporary income for persons under age 55
A temporary income is income that a person under age 55 can withdraw from his or her LIF if the following conditions are met:
- The contract entered into with the financial institution offers the option of a temporary income.
- The person has only one LIF.
- The gross amount of the estimated income (without taking into account the temporary income applied for) during the 12 months following the application for a temporary income is less than 50% of the maximum pensionable earnings (MPE), that is, 35 650 $ in 2025.
Note that
Income includes any amount considered as a salary, interest, annuity or other (before taxes).
It includes employment insurance benefits, income security benefits, benefits from the Commission des normes, de l'équité, de la santé et de la sécurité du travail (CNESST) and from the Société de l'assurance automobile du Québec (SAAQ), interest income, scholarships and salary insurance, etc.
It excludes income collected for third parties, such as Family Allowance and support payments for children.
Upon receiving an application for a temporary income, the financial institution calculates the amount that a person can withdraw, if he or she is entitled to it, and have him or her complete the declaration provided for in Schedule 0.5 to the Regulation respecting supplemental pension plans.
The temporary income is payable on a monthly basis from the month of the application for a temporary income until the end of the year. It is limited to a maximum.
Maximum temporary income payable per month for an application after 2024 = 1/12 de [50% of the MPE – 100% of the estimated gross income]
Where an application for a temporary income is filed in January 2025, the maximum temporary income in 2025 can reach $35 650 (= 50% of $71 300 = 50% of the MPE of 2025).
An application for a temporary income is valid until the end of the year. However, a person can file a new application during the year to decrease his or her monthly payments. Furthermore, a person whose income is reduced can file a new application to establish a greater temporary monthly income. If his or her income reaches 50% of the MPE, that is $35 650 in 2025 , he or she must ask the financial institution that manages the LIF to stop the payments of the temporary income.
Where a person applies for a temporary income after having received a life income from the same LIF or from another LIF during the year, the amount of life income paid can reduce the maximum temporary income to which the person is entitled for the year.
Where a person applies for a life income and a temporary income, the upper limit of the life income to which the person is entitled is equal to the result of the following equation:
Upper limit of the life income = (Prescribed rate) × (LIF balance on 31 December or 1 January) – (Maximum temporary income of the year following the filing of an application for a temporary income)
The upper limit of the life income cannot correspond to a negative amount to take into account the temporary income. In that case, the upper limit of the life income must be reset to zero. The purpose of the measure is to ensure that the person will still receive income at least equal to the temporary income to which he or she is entitled.
Where a person receives a temporary income from his or her LIF and transfers the LIF balance to another financial institution during the same year, he or she may continue to receive monthly payments of the temporary income from the other financial institution.
Income from an LIF for persons aged 55 and over
As of age 55, a person can withdraw all or part of his or her LIF balance, in one or more instalments, regardless of an amount of life income established or paid for the year.
To accompany the person in the withdrawal of his or her LIF, the financial institution provides its holder at the beginning of each year with a statement indicating the LIF balance and the estimated life income. The estimate allows the person to find out what income he or she can draw from his or her LIF, every year, for life. The estimate may vary annually. It does not affect a payment that may be requested by the person.
The financial institution that manages the LIFchooses the method to calculate the estimate. It could, for example, use the method described in the Regulation respecting supplemental pension plans (it is specified in section 12 of the Regulation to amend the Regulation respecting supplemental pension plans) or use it as a reference to adapt it, if necessary. To find out more on the method chosen, the holder must contact the financial institution.
A person can withdraw the amount he or she desires, each year, until his or her LIF balance is at $0.
Cashed amounts from an LIF are taxable.
It is only when investments come to maturity that a payment can be made. However, the contract entered into with the financial institution can allow the payment to be made before the investments have come to maturity. In that case, penalties or fees may be required depending on the contract.
Warning
Even if a person aged 55 and over can withdraw his or her LIF as he or she pleases, the person should plan his or her withdrawal strategy. If necessary, the person can contact a financial planner, or the financial institution that manages his or her LIF.
Amounts paid by mistake from an LIF
The holder of an LIF does not have to remit the amounts that were paid to him or her by mistake from his or her LIF to the financial institution.
Unless the holder of an LIF 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 LIF.
Legal references
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