What is a LIRA?
A Locked-In Retirement Account (LIRA), sometimes called a locked-in RRSP, contains accumulated pension benefits transferred out of a workplace pension plan. It is subject to rules and regulations made by pension regulatory authorities at federal and provincial levels. If the funds in your LIRA come from a pension plan in Ontario, for example, it will be subject to Ontarios pension regulations. If your workplace pension plan fell under federal jurisdiction — as it would if your worked for a bank, communications or transportation company, for instance — your LIRA will be subject to federal pension regulations. Generally speaking, funds in a LIRA may be invested in the same way as an RRSP — although some provinces do not allow a LIRA to contain the holders mortgage. The financial institutions holding your LIRA should be able to give you information about this if you need it. Like an RRSP, a LIRA must be converted to a stream of income by the end of the year in which the holder reaches
A LIRA is better known as a locked-in RRSP. The rules found in the Income Tax Act with respect to an RRSP apply to your LIRA. Therefore, you must purchase a life annuity or transfer money to a RRIF or a Variable Benefit Account by the end of the calendar year in which you reach 71 years of age. You also must follow the rules for investing an RRSP found in the Income Tax Act when investing your LIRA money. Can I withdraw money from my LIRA? Generally, no. “Locked in” means that the money in the LIRA cannot be withdrawn or surrendered and must ultimately be used to provide you with a pension. Please refer to our bulletin “Unlocking Pension Money” for an explanation of the exceptions to the rules locking in pension money. Saskatchewan does not permit unlocking of pension money to alleviate financial hardship. What happens to the money in my LIRA if I die? Your spouse must be named as the beneficiary of your LIRA. Your spouse has the option to receive the balance remaining in your LIRA as
