Personal Finance

LIRA - Unlocking non hardship

  • Last Updated:
  • Aug 24th, 2021 9:33 pm
Tags:
[OP]
Sr. Member
Jan 23, 2009
826 posts
1266 upvotes
Ontario

LIRA - Unlocking non hardship

Helping someone unlock his LIRA

(age 55) - (LIRA approx 100K) - (Ontario)

The rule in Ontario "non hardship" "transferred money into an Ontario life income fund that is governed by the requirements of Schedule 1.1 and, within 60 days of this transfer, you want to withdraw or transfer up to 50% of the total money that was transferred to the Schedule 1.1 LIF" info from https://www.fsrao.ca/consumers/pensions ... n-hardship

Once he transfer the monies as out of the LIRA into LIF cannot go back to LIRA and must withdraw min $$$ every year until i read this from National bank
Open a life income fund (LIF)
Transfer money from your LIRA to your LIF.
Withdraw the maximum allowed by law. to RRSP
Close your LIF.
Transfer the balance into a new LIRA before the end of the year.
Repeat these steps each year to access an additional portion of your retirement savings.
--> https://www.nbc.ca/personal/advice/reti ... re-65.html


he wanted to transfer as much as possible to his RRSP

anyone done that?
is National Bank correct $$ can go back to LIRA From LIF? "loophole"
you help is appreciated
Last edited by agit on Aug 24th, 2021 4:58 pm, edited 2 times in total.
4 replies
Sr. Member
Dec 3, 2019
510 posts
464 upvotes
Ontario
I'm confused how the money would be transferred back to a LIRA if that's not allowed?
Deal Addict
Jun 8, 2004
2030 posts
1098 upvotes
Oakville
agit wrote: Helping someone unlock his LIRA

(age 55) - (LIRA approx 100K) - (Ontario)

The rule in Ontario "non hardship" "transferred money into an Ontario life income fund that is governed by the requirements of Schedule 1.1 and, within 60 days of this transfer, you want to withdraw or transfer up to 50% of the total money that was transferred to the Schedule 1.1 LIF" info from https://www.fsrao.ca/consumers/pensions ... n-hardship

Once he transfer the monies as out of the LIRA into LIF cannot go back to LIRA and must withdraw min $$$ every year until i read this from National bank
Open a life income fund (LIF)
Transfer money from your LIRA to your LIF.
Withdraw the maximum allowed by law. to RRSP
Close your LIF.
Transfer the balance into a new LIRA before the end of the year.
Repeat these steps each year to access an additional portion of your retirement savings.
--> https://www.nbc.ca/personal/advice/reti ... re-65.html


he wanted to transfer as much as possible to his RRSP

anyone done that?

you help is appreciated
National Bank is a bank that is based out of Quebec, so that 2018 article was probably targeted at residents of Quebec. What the article is suggesting is that you move a portion of your LIRA into a LIF, take out the maximum % allowed from the LIF, then move the remaining LIF balance after the maximum LIF withdrawal back into a new LIRA. Unfortunately, not all provinces allow you to move a LIF back into a LIRA and must remain in a LIF.

In Quebec, it appears that you can transfer a LIF to a LIRA, consistent with the article.
https://www.rrq.gouv.qc.ca/en/retraite/ ... s/frv.aspx
You can transfer your LIF to an LIRA at any time until the end of the year in which you reach age 71, for example, if you wish to postpone payment of a retirement income. However, the transfer could be delayed if your investments have not come to maturity on the date you request the transfer.


In Ontario, where the OP is located, it appears that you cannot transfer a new LIF to a LIRA.
https://www.fsco.gov.on.ca/en/pensions/ ... fault.aspx
Q6. What are my options if I want to transfer money out of my New LIF?
A6. You may transfer money to another New LIF or use the money to purchase an annuity. Note that you cannot transfer money from a New LIF to a LIRA. -07/2007
Deal Addict
User avatar
Sep 14, 2012
2373 posts
1767 upvotes
Montreal, QC
agit wrote:
Once he transfer the monies as out of the LIRA into LIF cannot go back to LIRA and must withdraw min $$$ every year until i read this from National bank
Open a life income fund (LIF)
Transfer money from your LIRA to your LIF.
Withdraw the maximum allowed by law. to RRSP
Close your LIF.
Transfer the balance into a new LIRA before the end of the year.
Repeat these steps each year to access an additional portion of your retirement savings.
--> https://www.nbc.ca/personal/advice/reti ... re-65.html


he wanted to transfer as much as possible to his RRSP

anyone done that?
I live in the province of Quebec and the group pension plan where I used to work was governed by Quebec/province and wasn't a federal group pension plan and I've done the above (not with National Bank but with a branch of TD Direct Investing). I only did this for 1 year though (I did it last year) and because my financial advisor/planner was doing this for me (I just signed the paperwork and read through it before signing the paperwork) and I decided to leave the financial advisor/planner due to an issue that I had, I don't see myself doing it again for 2 reasons:

1) I don't have the time/energy to do it myself or the possible headaches involved and "liked" having paid someone to do this
2) Even though I gain more flexibility in terms of transferring funds from my/a LIRA to a/my RRSP, it isn't like the amount in my RRSP is negligible compared to the amount in my LIRA so I have plenty to draw upon in my RRSP already so don't think I will need the additional flexibility in having more LIRA money moved to my RRSP

In the province of Quebec (I know that the original poster isn't from Quebec or under the Quebec rules for the LIRA/LIF), these 2 links from our provincial government apply to provincially mandated group pension plans (which are transferred to LIRAs)

https://www.rrq.gouv.qc.ca/en/professio ... _ferr.aspx shows that a LIF can be transferred to a RRSP (or RIF but that's irrelevant)

https://www.rrq.gouv.qc.ca/en/retraite/ ... s/frv.aspx shows that a LIF can be transferred to a LIRA.

RBC also outlines this for Quebec residents: https://ca.rbcwealthmanagement.com/docu ... 26ff44c09e
Deal Addict
User avatar
Sep 14, 2012
2373 posts
1767 upvotes
Montreal, QC
cba123 wrote: In Quebec, it appears that you can transfer a LIF to a LIRA, consistent with the article.
https://www.rrq.gouv.qc.ca/en/retraite/ ... s/frv.aspx
As a Quebec resident (and someone under 71) who used to work for a company that had a provincially regulated group pension plan, when I no longer worked for the company, I transferred the amount to a LIRA and I can confirm that with our provincially regulated group pension plan which when moved to a financial institution becomes a LIRA governed by provincial rules and we can:

1) Transfer the entire amount of the LIRA amount to new LIF (which closes the LIRA)
2) Transfer the minimum yearly amount from the LIF to an RRSP tax free (and doesn't affect your RRSP contribution limit) as part of a direct transfer according to CRA rules (Pursuant to section 60L(V))
3) Amount left in LIF transfer that entire amount to a new LIRA
... and then repeat yearly

If someone in Quebec decides to do this, I would recommend that they do this after March 1 every year to simplify the tax receipt process as opposed to doing it between January 1 and March 1.

I did this last year with the help of my financial planner/advisor.

I will probably not do it again because I don't feel like doing it myself (I am no longer with this financial planner/advisor) and I don't think I will benefit that greatly from having the additional flexibility of having more money in my RRSP

Top