Withdrawing from a LIRA can be complicated if you don’t know where to begin. Locked In Retirement Accounts requires the completion of applicable forms and meeting certain requirements that vary province by province. As each province differs in terms of criteria, we’ve listed below common themes that you may withdraw for. Depending on the jurisdiction that the LIRA is subject to, funds can be accessed via
- Financial Hardship or
- Non-Financial Hardship
| Financial Hardship | Jurisdictions |
| Withdrawing from a LIRA based on Low Expected Income Individuals can complete one unlocking application per year for low expected income. Spousal consent would be needed. | Federal Ontario British Columbia Alberta Nova Scotia |
| Rent/Mortgage in Arrears Individuals behind on their mortgage payments could request to access their locked in funds. | Ontario British Columbia Alberta Nova Scotia |
| First and Last Month’s Rent & Security Deposit If you’re looking to secure a place to live, you may access your locked in funds by completing applicable forms. | Ontario Alberta British Columbia |
| Withdrawing from a LIRA due to Medical & Disability Costs The account holder may request a one time unlocking in order to cover medical costs. A doctor’s note must accompany the unlocking documents. | Federal Alberta Ontario Nova Scotia |
| Non-Financial Hardship | Jurisdictions |
| Small Balance Unlocking (Restricted by Age & Amount in Certain Provinces) Small Balance refers to accounts whose total value is less than a certain percentage of the YMPE. For example, in Ontario, you must be at least 55 years old and the value of the account must be less than 40% of the YMPE. | Federal Alberta British Columbia Ontario Manitoba Saskatchewan Nova Scotia Quebec |
| 50% Unlocking (Restricted by Age in Certain Provinces) You may unlock 50% of the value of your LIRA/LRSP by opening a LIF/RLIF & completing the applicable provincial & federal forms. Once unlocked, you may transfer 50% these funds into an RRSP while the other 50% will stay in the LIF/RLIF. | Federal Ontario Alberta Manitoba |
| Shortened Life Expectancy You may proceeding withdrawing from a LIRA if your life expectancy has been shortened due to a terminal illness. For example, in Ontario, you may withdraw from your account if your life expectancy has been shortened to 2 years or less. You would need a doctors note and spousal consent. | Federal Alberta British Columbia Ontario Quebec Manitoba Saskatchewan Nova Scotia New Brunswick |
| Withdrawing from a LIRA due to Non-Residency If you’re a non-resident of Canada and have been so for more than 2 years, you may unlock your funds pending that you’ve received a confirmation letter from the CRA. | Federal Alberta British Columbia Ontario Quebec Manitoba Saskatchewan Nova Scotia |
Be mindful that in order to unlock the account, applicable forms and spousal consent may have to be provided.
Withdrawing from a LIRA Tax Consequences
Keep in mind that withdrawing from a LIRA is a taxable event and the income is added to your annual income. Withholding tax would apply.
| Withdrawal Amount | Up to $5,000 | Between $5,000 and up to $15,000 | Over $15,000 |
| Tax Rate withheld for Canadian residents | 10% | 20% | 30% |
| Tax Rate withheld for the province of Quebec | 5% | 10% | 15% |
Tax Issues at Death
One of the most important things you could do is naming a qualifying beneficiary on your LIRA. A qualifying beneficiary would be
- spouse/common law partner
- financially dependent child
- financially dependent child with mental or physical disability
By naming a qualifying beneficiary, upon your death, the funds in the plan can be transferred into a locked-in plan, a registered plan or may be used to purchase an annuity on a tax deferred basis.
If the beneficiary is listed as estate or a non-qualifying beneficiary, then the funds accumulated in the locked-in plan would be taxable on your final return.
Each provincial jurisdiction is different but upon your death, depending on the province, funds can stay locked-in and be transferred to your spouse. When the beneficiary is someone other than your spouse, the funds would become unlocked. Each province deals differently with their locked-in account legislation which is why it’s important to visit your provincial pension regulators’ website.
Provincial Pension Regulators
Federal – Office of the Superintendent of Financial Institutions
Alberta – Alberta Finance Pensions
British Columbia – BC Financial Services Authority
Manitoba – Manitoba Pension Commission
Ontario – Financial Services Commission of Ontario
Quebec – Retraite Quebec
New Brunswick – Financial and Consumer Services Commission
Newfoundland & Labrador – Service NL
Prince Edward Island – No Provincial Legislation
Saskatchewan – Financial and Consumer Affairs Authority
Northwest Territories – Office of the Superintendent of Financial Institutions
Yukon – Office of the Superintendent of Financial Institutions
Nunavut – Office of the Superintendent of Financial Institutions
