Description
LIFs are investment vehicles intended to disperse the assets that have accumulated in a locked-in RSP (LIRA or LRSP). Like an RRIF, a LIF has a minimum amount that must be withdrawn every year. However, in contrast to an RRIF, a LIF also has a maximum withdrawal limit per year.
Setting Up a LIF
Requirements
- LIF application form
- Addendum (The addendum specifies the locking-in provisions)
- Spousal consent
Withdrawals
The first calendar year
Payments from a LIF must begin no later than the end of the year following the year that the LIF was created. There is no required minimum amount that must be withdrawn during the first year. The maximum amount that can be withdrawn is prorated according to how many months the LIF plan has existed. Withholding taxes apply on any amount withdrawn during the first year.
Minimum required withdrawals
Minimum required payments are calculated the same way RRIF minimum payments are calculated. The amounts are based on the LIF account balance on 1 January of each year, and the investor's age. No withholding taxes apply to withdrawals of the minimum amount.
Age at Start of Year |
% |
Age at Start of Year |
% |
70 and less |
Balance Jan 1st/90 - age |
83 |
9.58 |
71 |
7.38 |
84 |
9.93 |
72 |
7.48 |
85 |
10.33 |
73 |
7.59 |
86 |
10.79 |
74 |
7.71 |
87 |
11.33 |
75 |
7.85 |
88 |
11.96 |
76 |
7.99 |
89 |
12.71 |
77 |
8.15 |
90 |
13.62 |
78 |
8.33 |
91 |
14.73 |
79 |
8.53 |
92 |
16.12 |
80 |
8.75 |
93 |
17.92 |
81 |
8.99 |
94 and more |
20.00 |
82 |
9.27 |
|
|
Maximum allowed withdrawals
Unlike RRIFs, there is a maximum amount that may be withdrawn from a LIF in any given year. This maximum, which is a percentage of the amount in your plan, is designed to keep you from depleting your assets.
Early Payouts
Shortened life expectancy
Jurisdiction |
Earliest Age to Convert to LIF/LRIF/Annuity |
Federal |
Any age |
British Columbia |
Age 55 or earlier if the pension plan allows it |
Alberta |
Age 50 or earlier if the pension plan allows it |
Saskatchewan |
Age 55 or earlier if the pension plan allows it |
Manitoba |
Any age |
Ontario |
Age 55 or earlier if the pension plan allows it |
Quebec |
Any age |
New Brunswick |
Any age for a LIF; age 55 for annuity |
Nova Scotia |
10 years earlier than normal retirement age provided in the pension plan |
Newfoundland |
Age 55 or earlier if the pension plan allows it |
Financial hardship
Only two jurisdictions allow for an early payout due to financial hardship:
- Ontario: Permission must be obtained from the Superintendent of Pensions.
- Quebec: It is only allowed for temporary income and subject to certain restrictions.
Termination
Any remaining balance in the LIF must be transferred to an annuity by the end of the year in which the investor turns 80. |