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The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

The Great-West Life Assurance Company, London Life Insurance Company and The Canada Life Assurance Company have become one company – The Canada Life Assurance Company. Discover the new Canada Life

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Freedom 55 Financial is a division of The Canada Life Assurance Company and the information you requested can be found here.

When can you unlock a LIRA?

Key takeaways

  • Generally, the only way to unlock a LIRA is to retire, and the earliest age you can do that is 55
  • Different jurisdictions have different rules for LIRA unlocking
  • There are some reasons for LIRA unlocking which are common to more than 1 jurisdiction

Getting money out of your LIRA

If you have a locked-in retirement account (LIRA), it’s because you’ve transferred money into it from a former employer’s pension plan or from a former spouse’s employer pension plan, for example, when marital assets were divided during a divorce. For that reason, typically the only way to unlock a LIRA is to retire, and the earliest age you can do that is 55. 

To get income from a LIRA in retirement, you’ll need to transfer the funds to a life income fund (LIF) or a life annuity. Money that’s moved into a LIRA can be self-managed.

LIRA withdrawal exceptions

Different jurisdictions have different rules for LIRA unlocking other than at retirement. Some reasons are common to more than 1 jurisdiction:

  • Small amounts: If the amount of money you have in your LIRA is considered too small be useful as a pension, you may be able to unlock it.
  • Shortened life expectancy: If a doctor provides an opinion that you have a terminal illness or disability that will significantly shorten your life, you may be able to unlock the money in your LIRA.
  • Non-residence in Canada: If the Canada Revenue Agency (CRA) confirms in writing that you’re a non-resident of Canada for tax purposes, you may be able to unlock your LIRA.
  • Financial hardship: In some jurisdictions, if you’re facing financial hardship, you may apply to unlock a portion or all the money in your LIRA.
  • 50% unlocking: Depending on your jurisdiction, you may qualify to unlock up to 50% of your LIRA funds and transfer them to a registered retirement savings account (RRSP).

Check the rules for your specific LIRA to confirm your options:

LIRAs don’t exist in Prince Edward Island.

Paying tax on LIRA withdrawals

You’ll pay income tax on any money you receive from an unlocked LIRA, or from withdrawals from a LIF or annuity into which you’ve transferred your LIRA funds.

What's next?

Now that you know more about withdrawing money from a LIRA, why not meet with your advisor to:

  • Determine other sources of retirement income and what your total income might be in retirement.
  • Review the LIRA withdrawal options available for your situation.
  • Determine which strategy for withdrawing money from your LIRA best meets your needs.

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.