Financial Planning   ->   Pensions   ->   Registered Pension Plans (RPPs)   -> Federal RPP transfer to LIRA

Transfer of a Federally Registered Pension Plan to a Locked-In Plan

Where employment has been terminated with a federally regulated employer, the Registered Pension Plan of the employee can usually be transferred to a locked-in retirement account, also known as a locked-in RRSP.  These accounts are governed by the federal Pension Benefits Standards Act (PBSA).  How the funds are withdrawn by the employee are covered by the Pension Benefits Standards Regulations s. 20 and 20.1.  The following rules apply:

• The funds in the locked-in account:
  • can be transferred to another locked-in-retirement account
  • can be used to purchase an immediate life annuity or a deferred life annuity at any time
  • can be transferred to a life income fund (LIF) at any time
    • once converted to a LIF:
      • minimum withdrawals are determined by Canada Revenue Agency (Income Tax Act) rules
      • maximum withdrawals are determined by PBSA rules - see LIF maximum payment amount table from the website of the Office of Superintendent of Financial Institutions (OSFI), on the Life Income Funs, Restricted Life Income Funds, and Variable Benefits Accounts web page.
      • it is no longer required that an annuity be purchased at age 80.
      • Once age 90 is reached, 100% of the LIF may be withdrawn.
• A locked-in retirement account may provide that if a physician certifies that the life of the holder of the account is expected to be shortened considerably due to mental or physical disability, the funds can be withdrawn in a lump sum.
• By the end of the year in which the taxpayer turns 71, a locked-in account must be transferred - for options see the article on locked-in retirement accounts.

For information regarding unlocking of federally-regulated locked-in pension plans, see the article on unlocking your pension plan.

Revised: