LIF - Life Income FundA LIF (Life Income fund)is the conversion from a LIRA (locked-in retirement account), which provides you with an income stream. Provincial pension rules oversee these accounts along with the (Some provinces have what's called an LRIF which is similar to the LIRA). Government sets the minimum and the maximum withdrawal amounts each year:
The amount you receive each year is a percentage of the the account. If your are invested in the stock market these accounts can fluctuate up and down with with the stock market. New Rule--you have a choice now you can: request a maximum of the amount of investment earnings of the account over the previous year or use the existing formula which ever amount is the greater. The amount to be received is normally determined at the beginning of the year(January) and paid out during the ensuing 12 months. The beginning of the following year the process repeats its self. The transfer process goes like this--Pension money goes:
Because the original money came from a Pension, your spouse will have to sign off on any transfer. If you die while holding locked-in money--the account will be unlocked and paid out your beneficiary. (after the Tax is collected of course) New Rule--a portion can be "unlocked" and transferred into an RRSP/RRIF-deferring the TAX consequences until withdrawal. New Rule--Locked-in account owners who are no longer residents of Canada may now withdraw all their cash after two years. "I have seen thePension transfer process take up to a year to complete. I urge anyone in this situation to see a Financial Planner well before you need the cash." Return from LIF to Retirement Savings Account |
