A refund of your LIRA or LIF
A refund of your locked-in retirement account (LIRA) or life income fund (LIF) is possible, under certain circumstances.
- To obtain a cash payment (refund), an application must be made to the financial institution.
- All refunds are taxable. However, income tax can be deferred if the amounts can be transferred directly to an RRSP or a registered retirement income fund (RRIF).
If you are age 65 or over
You can withdraw the entire amount in your LIRA or LIF provided you meet the following two requirements:
- You are age 65 or over at the end of the year preceding the one in which you apply.
- The total locked-in amounts accumulated in your retirement savings instruments mentioned below are not more than 40% of the maximum pensionable earnings under the Québec Pension Plan for the year in which you apply ($23 480 in 2020).
Your LIRA or LIF can be refunded at any time, regardless of the date on which your investments mature. However, you could be charged fees before that date.
To have your LIRA or LIF refunded, complete
Schedule 0.2 of the
Regulation respecting supplemental pension plans and send it to the financial institution.
Savings instruments affected:
- Defined contribution pension plans or the defined contribution component of a defined benefit pension plan
- Simplified pension plans (SIPPs)
- Locked-in RRSPs
- Voluntary retirement savings plans (VRSPs)
A helpful example...
Patricia is 66 years old on 31 December 2019. On 15 January 2020, she applies for and draws a life income of $1752 from her
LIF account, which has a total value of $24 000.
Since the balance of Patricia's
LIF is now $22 248 and she does not have any other savings vehicles from the list above, she can immediately withdraw the balance of her account, which is now less than $23 480, that is, 40% of the
2020 (40% x $58 700).
If you no longer live in Canada
You can request that the balance of your LIRA or LIF be refunded in a single payment at any age, if:
- you have not lived in Canada for at least two years
- the investments have matured.
Worth knowing about ...
- Your LIRA or LIF cannot be refunded until your investments have matured unless it is stipulated in your contract. In such a case, you may be charged fees.
- It is the financial institution's responsibility (not ours) to ensure that you have not been living in Canada for at least two years. In order to do so, the financial institution must obtain proof that it deems satisfactory.
If you are disabled
You have an LIRA
Your LIRA can be refunded in full or in part if you are disabled because you have a physical or mental condition that reduces your life expectancy.
The refund can be made as a lump sum or several payments. It can be made regardless of the maturity date of your investments. However, you could be charged fees before that date.
To obtain a refund, you must provide the financial institution with a medical certificate stating that you are disabled due to a physical or mental condition that reduces your life expectancy.
Financial institutions can neither tighten nor loosen those restrictions.
The disability must reduce your life expectancy
- Your life expectancy does not necessarily have to be significantly reduced.
- If your health problems do not affect your ability to work, you cannot be considered disabled.
- The requirements for being deemed disabled are different from those under the Québec Pension Plan.
The medical certificate
The medical certificate must be issued by a physician who is a member of the Collège des médecins du Québec or, if the physician is outside Québec, he or she must be a member of an equivalent body.
The medical certificate does not have to mention the diagnosis or your actual life expectancy. It merely has to state that you are disabled due to a medical condition that reduces your life expectancy. The certificate can be a letter signed by your physician. An example follows.
2 January 2020
Mr. Charlie Bailey
7878 Street Avenue
Quebec City, Quebec
Subject: Medical certificate
Dear Mr. Bailey,
I hereby confirm that you are disabled due to a medical condition that reduces your life expectancy.
Dr. Smith, M. D.
Your Medical Clinic
9696 Your Street
Quebec City, Quebec
You have an LIF
If you are disabled, you cannot obtain a refund directly from your LIF. You can, however, obtain a refund from an LIRA. To do so, you must transfer your LIF to an LIRA before the end of the year in which you turn 71, and meet the requirements entitling you to a refund of your LIRA due to disability.
When you die
After your death, the balance in your LIRA or LIF will be paid to your spouse. If he or she has renounced it or if you do not have a spouse, the balance will be paid to your heirs.
Your LIRA or LIF can be refunded at any time, regardless of the date on which your investments mature. However, you could be charged fees before the date.
Amounts withdraw are taxable, unless they can be transferred on a tax-free basis, for example, such as in the case of a derect transfer from your LIRA to your spouse's RRSP. For detail, consult the Canada Revenue Agency .
Beware of fraudulent withdrawals
We urge you to be wary of classified ads that propose various tax-free ways to withdraw money from your LIRA or LIF, such as by purchasing stock shares or taking out a loan. Those methods are fraudulent. They can have significant tax effects, and you could lose your money. To find out more, please consult the Fraud in classified ads section on the Autorité des marches financiers du Québec's Web site.