Personal Retirement & Savings:
Locked-in Retirement Accounts (LIRA)
Locked-in Retirement Accounts (LIRA) are essentially locked-in RRSPs. They hold locked-in funds that have been transferred from a registered pension plan for a former plan member, former spouse or common law partner, or surviving spouse or partner.
With these accounts, funds are typically only available to their holders upon retirement. Locked-in Retirement Accounts differ from RRSPs as an RRSP can be cashed in at any time, but the funds in a Locked-in Retirement Account must remain locked-in until retirement.
In a Locked-in Retirement Account, funds are locked-in until retirement and you cannot contribute to the account—only funds from your retirement plan can be invested, but the investment income grows tax-free. Additionally, you are not allowed to withdrawal from your Locked-in Retirement Account unless a doctor certifies that your life expectancy is reduced due to physical or mental disability.
Why should I open a Locked-in Retirement Account?
Locked-in Retirement Accounts are beneficial for individuals who prefer a self-directed investment and who want their earnings on investments, dividends, and capital gains to grow tax-free.
How long can I have my Locked-in Retirement Account for?
You can keep your Locked-in Retirement Account until the end of the year in which you turn 71, and you must convert your Locked-in Retirement Account into a Life Income Fund (LIF) in order to begin receiving retirement annuities.