Locked-in retirement accounts (LIRAs) and life income funds (LIFs)

It could represent, for example:

• an amount paid from an LIRA that should not be paid;
• income taken from an LIF that is greater than the maximum allowed.

Unless he or she made a false declaration, the person who has an LIRA or LIF does not have to repay the amounts to the financial institution. Furthermore, this person can require the financial institution to pay a penalty equal to the overpayment.

If the amounts come from a plan subject to the Supplemental Pension Plans Act:

• Most of the time they cannot be seized. The Code of Civil Procedure (R.S.Q., chapter C-25.01) may however provide for certain exceptions.

If the amounts come from a public-sector pension plan (e.g., RREGOP, PPMP, etc.):

• They can be seized if there has been no bankruptcy or, if there has been bankruptcy and the amounts were paid into an LIRA or LIF in the 12 months preceding the bankruptcy.
• They cannot be seized if the amounts were paid into an LIRA or LIF more than 12 months preceding the bankruptcy.

When a person who held an LIRA or an LIF dies, the LIRA or LIF balance is no longer locked in. It is paid to the recognized spouse. However, if that person has renounced it or if there is no spouse, it will be paid to the successors (e.g.: heirs).

If the deceased's LIRA or LIF contains amounts from the breakdown of a former union, the amounts will only be paid to the new spouse if so provided in the LIRA or LIF contract or if he or she is the successor.

In all cases, cashed amounts are taxable, unless they can be transferred tax-free. For more information on tax rules regarding this matter, please contact the Canada Revenue Agency  or call 1 800 959‑7383.

Yes. A spouse can renounce at all times his or her right to receive the balance of an LIRA or LIF after the holder's death, unless he or she has already received it. He or she can renounce his or her right after the holder's death, but before the sums have been paid. A written notice regarding this matter must be provided to the financial institution.

The spouse may revoke his or her renunciation by written notice to the financial institution, but only before the holder's death.

No. Retraite Québec does not have the power to authorize a person to withdraw from an LIRA or LIF. The holder may obtain a refund of his or her LIRA or LIF under specific circumstances (age 65, non-resident in Canada, disability and death).

LIRAs and LIFs are part of the family patrimony. They can be partitioned following the breakdown of a marriage or civil union. They can also be partitioned between de facto spouses if both spouses agree to partition in the 12 months following the breakdown of the union. Note that, regardless of the amount, amounts received through partition must be locked in. Thus, the money can only be used to provide retirement income for a former spouse. For more details, please consult the section on partition of an LIRA or LIF.

No. The LIRA or LIF cannot be used to establish an HBP or LLP.

No. The only sums that can be transferred to an LIRA are those from:

• another LIRA;
• another LIF;
• a supplemental pension plan;
• a locked-in account of a VRSP.

Yes. Sums accrued in an LIRA or LIF can be used to buy back years of credited service under a defined-benefit pension plan or a target-benefit pension plan. However, the pension plan must allow for this buy‑back.