What is a Locked-In RRSP/LIRA?
If you leave a workplace that has a pension plan before you reach retirement age and the terms of your pension allow it, you may be able to transfer your accumulated pension benefits into a locked-in account. The funds can then be invested in the same way as you would invest an RRSP, except with a number of other restrictions. Since funds in a locked-in RRSP come from a workplace pension plan, locked-in accounts are regulated by pension legislation, which determines the terms and conditions of these plans. To minimize confusion surrounding a regular RRSP and a locked-in account, locked-in RRSPs are now generally referred to as Locked-In Retirement Accounts (LIRAs). Pension legislation requires the funds in a locked-in RRSP or LIRA be used to provide a lifetime income for the holder. That means you cannot make a lump sum withdrawal from a locked-in plan, nor can you cash it in at any time.
