Cash payments (refunds) from a simplified pension plan (SIPP)
In some situations, a member is entitled to a cash payment (refund). All refunds are subject to income tax. However, income taxes can be deferred if the amounts can be transferred directly to an
RRSP or a registered retirement income fund (RRIF). For details, consult the
Canada Revenue Agency .
Disability that reduces life expectancy
If a physician certifies that the member is disabled due to a physical or mental condition that reduces his or her life expectancy, he or she can obtain a lump-sum payment of amounts credited to his or her locked-in and not locked-in accounts. The refund must be made within 60 days following the date on which the application is filed.
Contributions that exceed taxation limits
The member will receive a refund of the portion of the contributions credited to the locked-in and not locked-in accounts that exceeds the maximum allowed under taxation rules. Once the financial institution sees that the contributions exceed the maximum, a refund will be made to the member. It is not necessary to file an application. Such refunds are taxable and cannot be transferred directly to an
RRSP to defer taxes. For details, consult the
Canada Revenue Agency .
Other cases where cash payments can be made
Account balance less than 20% of the maximum pensionable earnings (MPE), which is
$12 320 in
A member is entitled to a refund of sums credited to his or her locked-in account if, when active membership ends, the total amount is less than 20% of the
MPE, which is $12 320 in
Retirement savings less than or equal to 40% of the maximum pensionable earnings (MPE), which is $24 640 in
A member is entitled to a refund of the sums credited to his or her locked-in account if both of the following conditions are met:
- he or she is at least 65
- the total of the sums credited to the locked-in
SIPP account, the defined contribution pension plan, the life income funds and the locked-in retirement accounts is less than or equal to 40% of the
MPE for the year in which the refund application is made, which is $24 640 in
To obtain the refund,
Schedule 0.2 of the
Regulation respecting supplemental pension plans must be completed and sent to the financial institution.
Not locked-in account
With a few exceptions, the member can receive, at any time, a refund of all or part of the sums credited to the not locked-in account, even if he or she is still an active member.
Exceptions for member contributions
It may not be possible to obtain a refund of member contributions until the member's active membership ends or he or she turns 55 (whichever comes first).