LIRA -- Locked in retirement accountsLIRA -- The “Locked-In Retirement Account’ and the ‘virtually’ identicalLocked-in Retirement Savings Plan (LRSP), are Canadian Registered investment accounts designed to hold the pension money of former pension plan members. The term locked-in is used to describe these plans -- because the cash inside them cannot be accessed before age 55 and then normally only as an ‘Income Stream’. People change jobs more often these days and when they leave their current employer. It is becoming more common for employers to require a transfer out of the pension plan when the employee leaves. If the new employer cannot or will not accept the vested pension funds the employee must open a Locked-in retirement account. Smaller amounts in a locked in account ($18,500 or less as a total of all locked-in accounts) (for that tax year) may be withdrawn as a lump sum. (after you reach age 55) The Government of Ontario has also enacted new rules to allow access to some of this cash under a 'financial hardship provision'. For more detailed information about getting cash out of a Locked-in retirement account Changes in transfer Rules for a Locked-in retirement accountThe latest rule allows up to 25% of pension funds being transferred to a Locked-in account can be transferred directly into your RRSP, instead, unlocking 25% of that cash.Many of these accounts are very small and if they are below your (maximum taxable pensionable earnings) amount, you may withdraw the money - paying the tax of course or transfer directly into an RRSP/RRIF (Registered plans) Your Accountant, Tax preparer, or Financial advisor can quickly determine if you can withdraw or transfer these funds.
Return from LIRA to Retirement Savings Accounts
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