Transfer rules for a defined contribution plan
The following rules apply to transfers from a defined contribution plan.
What are the conditions that apply to transfers?
To be entitled to transfer the amounts credited to his or her account, the member must no longer be an active member of the pension plan. That is usually the case if he or she has quit or lost his or her job.
Exceptions to the rule
Generally, a member is not entitled to transfer the amounts credited to his or her account if one of the following situations applies:
When can transfers be made?
A member can apply for a transfer of the amounts credited to his or her account at the following times:
- within 90 days following receipt of a statement of cessation of active membership, if the member is more than 10 years away from the normal retirement age under the plan (for example, under 55 and the normal retirement age is 65)
- thereafter, once every 5 years, within 90 days following the anniversary of the date on which active membership ceased
- at any time, if the member is 10 years or less from the normal retirement age or if the member is over the retirement age (for example, if under 55 and the normal retirement age is 65)
A plan can be more generous and provide, for example, that a transfer can be made at any time, regardless age when active plan membership ceases. The plan summary contains the rules that apply.
When informed that a member's active membership has ceased, the plan administrator has 60 days to send a statement of cessation of active membership. The statement will show the value and nature of the amounts credited to the member's account.
A helpful example...
David turned 47 years old on 15 January 2020. His active plan membership ends on 31 January 2020. He receives a statement of cessation of active plan membership from the plan administrator on 15 March 2020. The normal retirement age under the plan is 65.
David can apply for a transfer of the balance of his account at the following times:
- between 16 March 2020 and 13 June 2020 (age 47)
- between 1 February 2025 and 1 May 2025 (age 52)
- at any time as of age 55
To whom is an application for a transfer made?
An application for a transfer must be made to the administrator of the plan. The administrator's address and the contact information of a plan contact person who can provide more information is shown on the statement of cessation of active membership. That information is also available by using our online consultation service for supervised pension plans.
What can be transferred?
Under a defined contribution plan, all the sums credited to a member's account
- the employer contributions with interest
- the member contributions with interest, if members contribute
- additional voluntary contributions, if any
- sums transferred to the plan, with interest, if any transfers were made
Where can transferred benefits be sent
The member decides where the sums credited to his or her account will be transferred.
The following transfer options are possible:
- a locked-in retirement account (LIRA)
- a life income fund (LIF)
- a deferred or immediate life annuity contract purchased from an insurer
- the new employer's pension plan (if transfers can be received under the plan's provisions)
- an RRSP or a registered retirement income fund (RRIF) for any sums that can be directly refunded to the member
The sums credited to a member's account can be left in the plan's pension fund (unless the plan is terminated). However, such sums will have to be converted into retirement income no later than 31 December of the year in which the member reaches age 71.
In what circumstances can you receive a cash refund?
In some situations, a member can receive a cash refund. The plan must provide for certain refunds; others may be offered as options.