LIRA

What is a LIRA?

1. Registered account - much like your RRSP
2. Comes from company pension plan (Defined Contribution or Defined Benefit)
3. Designed to be a long term income generator in retirement much like a pension
4. How can you invest it? Just like your RRSP, TFSA or any other type investment account – high interest savings, stocks, bonds, mutual funds, etfs, etc.
5. Legislation – each LIRA is either a provincial or federal LIRA 

LIRA vs. RRSP:

• With a LIRA your money is locked in
  • Can’t redeem for (almost) any reason
  • Minimum amount required to take out once converted to a LIF – much like a RRSP (when converted to a RRIF)
  • Maximum amount required to take out once converted to a LIF – this is the key difference from a RRIF
    • See chart

Ways to access your LIRA early:

1. Reduced Life Expectancy
2. Non-Resident
3. LIRA is small
4. Financial Hardship

What happens at retirement with a LIRA and can you unlock it?

1. At retirement you will convert your LIRA to a LIF or life annuity.
2. Some LIRAs allow for unlocking – which in simple terms is moving a percentage of your LIRA to a RRSP.
   • See below for which provinces allow unlocking. If you are able to unlock – unlock the max amount.

Strategies we recommend if you have a LIRA:

1. Unlock as much as you can to create more flexibility in a RRSP vs leaving in LIRA.
2. Start redeeming the max amount from the LIRA (LIF) as possible when it makes sense. This should be the first account you take max redemptions from once you hit retirement.
3. Consider converting to a LIF earlier than retirement if added income won’t affect your tax situation too much. Will income in retirement be the same or more than pre-retirement? Consider taking out before you retire.