# My bank says that I can't unlock my LIF



## timejester (Jan 23, 2011)

Hello everyone,

My bank (RBC), is restricting me from converting my LIF, essentially un-locking the funds, to 50% RRSP and turning the balance into an RLIF. I've copied the correspondence so that someone with a better understanding than I can comment on what was written. I have perused the Pension Act which doesn't seem to have any of the restrictions referred to in her e-mail but I may have missed something , So, if anyone can validate Linh's perspective or tell me something different I'd surely appreciate it. The e-mail from Linh, my present fund manager and the email she referred to are copied below.

I am over 55, took out my pension plan August 2009, creating a LIRA and then a LIF simply want to unlock 50% and place it an RRSP which I can then withdraw from.

Here's my last correspondence with the bank that suggests that once I've opened up my LIF (all documents suggest its a LIF even though the author, linh, suggests its an RLIF. I think I see where she gets this idea-see e-mail from Melissa below where she talks about reconverting a file to maintain its RLIF options.....Alex, could you take a look at what Linh, my RBC fund person has said to refuse my request and see if she has a valid point.....and that I will have to resort to non-resident status to get access to my funds....thanks...


Hi Brian,

I took the time to read your correspondence with DesJardins. Since your account was opened after November 2008, the new rules should have applied at that point already. DesJardins should have informed you of the 50% unlocking option for you to exercise at the time of opening. If you look at point #3 from Melissa's email, the amount was kept in an RLIF (Restricted Life Income Fund); meaning it is restricted with no further changes that can be made. So the funds that were transferred in to RBC, were they in the form of a RLIF? It looks like we may not be able to assist you with this as the federal rules clearly state that no unlocking can be done if the proceeds orginated from an RLIF. 

Thanks,

Linh


E-mail From Melissa (former fund manager from an Ottawa bank) re:first opening of my pension plan

Hi Brian,

Here's what needs to be done for you to access your money. 

1- We will convert your LIRA into a LIF. We will then withdraw your ''maximum allowed''. The amount is more significant that we I originally thought it would be : approximatly $ 9863.91. That amount will be transfered in your RRSP account. Please sign the application forms for the LIF and the RRSP. 

2- We will do a withdrawal in the RRSP. The maximum will be the available amount (approximatly $ 9863.91). Remember that the withdrawal is taxable. 

Please write the amount that you wish to withdraw and sign the form. 

RRSP withdrawal 

3- After this transaction will be completed, we will reconvert the LIF in the LIRA. This will allow you to keep the RLIF option on the account. 

Please sign the documents and return scanned as soon as possible. (First one is RRSP application, second is LIF application and third is RRSP withdrawal.) 


All posts are greatly appreciated,

Brian


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## warp (Sep 4, 2010)

Just another example of how the government has complicated our lives......and its OUR money we are talking about.

Before you do anything, double check every "new" rule you will create by converting 50 % of your LIRA.

I looked into this last year for a friend, and getting a straight answer we could count on from anyone was near impossible.

Be aware that once you convert the 50% of your LIRA you may have to now start making mandatory yearly wiithdrawls from your "new" plan, whether you want to or not.

Best I can do is wish you luck......the whole thing was such a mess, and not understood by anyone, including bank managers, advisors, and even govt employees, that my friend decided to just leave it alone.

There is a thread on this board started by "BELGUY"...who did convert his LIRA. and who then ran into all kinds of complications and problems he was not aware of, and was not told/warned of, at his bank.

Search this site...and you will find the thread.

Again, good luck


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## timejester (Jan 23, 2011)

*I'm afraid you've hit the nail on the head*

Thanks for the perspective Warp. As much as I hate to say it, I am a bit confused myself now. What I don't quite understand is the necessity to put in this one-time un-locking option within 6-mths of opening an LIF or LIRA or whatever. To be quite honest, everything I've ever got done with my pension has taken at least 6-months of hurdles to jump to establish what options are available and their implications....my 'fund manager' needs to go to someone else for verification etcetera everytime a new option is considered.

As a current resident of Thailand returning to Canada now I think I'll just take the non-resident option and take my whole pension out at a tax hit of 25% and just try my luck in the market offshore sort of speak.....of course I guess I put in back in an RRSP in Canada but I just think it's really unfair I should have to do that.


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## OptsyEagle (Nov 29, 2009)

I will tell you what I know and hope it helps. I am not sure I completely follow what you have done. 

If you open a LIF or an LRIF after 2008 you have the option to unlock a percentage of it and transfer that into an RRSP. I can't remember if this transfer needs to be done within a period of time after you open the LIF, but it probably does. 

Now, once you make this unlocking transfer to your RRSP, the LIF becomes a RLIF (Restricted Life Income Fund). That is because, you only get this benefit once. They don't want you to take $20,000, transfer it to a LIF, take out $10,000, then tranfer the other $10,000 to a new LIF at a new financial institution and then take out another $5,000. So once it is in a RLIF, every institution going forward, knows that you have already taken out your 50% and no more unlocking is allowed. That is all an RLIF is and they came about at the time the unlocking rules were enacted. 2008 sounds about right.

As another poster said, many institutions get confused with this. That is because we have about 10 provincial rules and a federal set of rules and they are all pretty much different. I have seen a person mistake a LRIF for a RLIF. The former being a Locked in Retirement Income Fund and the latter being a Restricted Life Income Fund. Two different animals, but if your banker looks up the rules for a LRIF and gets the ones for a RLIF, they are going to tell you that it cannot be unlocked, when we know that LRIFs can be unlocked.

Anyway, it is quite a mess, but I suspect your banker has given you wrong information or worse, your money was transfered in as an LRIF and the banker, when receiving it, tagged it incorrectly as an RLIF. Big difference.


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## warp (Sep 4, 2010)

Basically , the whole thing is a red tape govt disaster as usual.
Its the same with just about anything they do.
Best I can do is wish you luck in untangling the mess, so you can get on with your life.

As an afterthought: TIMEJESTER : Do you live in Thailand now?

I have a friend who has decided to move to Thailand, and is trying to get his affairs in order, including his RRSP.
Any advice you could give?

As for myself, I may be going to Thailand with him for 4 weeks, in a couple of months.
Could you tell me what its like there, where you live, the weather, what the life is like, etc, 

Thanks, and again, good luck.


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