# Pension Splitting



## piano mom (Jan 18, 2012)

I've heard that for those of us under 65, the only pension splitting oportunity is if I'm receiving annuity payments from a registered pension plan. If I had a LIRA, and I start withdrawing from it at age 55, am I able to split this income with my spouse? Would I have to buy an annuity with the LIRA funds first? I would prefer to avoid annuities if possible.

Thanks!


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## MoneyGal (Apr 24, 2009)

piano mom said:


> I've heard that for those of us under 65, the only pension splitting oportunity is if I'm receiving annuity payments from a registered pension plan.


Correct. 



piano mom said:


> If I had a LIRA, and I start withdrawing from it at age 55, am I able to split this income with my spouse?


No. 



piano mom said:


> Would I have to buy an annuity with the LIRA funds first?


Yes.



piano mom said:


> I would prefer to avoid annuities if possible.


You should avoid annuities at age 55.


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## OhGreatGuru (May 24, 2009)

You don't necessarily have to buy annuities. From CRA T4040: 

_However, under the pension laws of certain provinces, pension funds or funds from a locked-in RRSP can be transferred to a locked-in RRIF. These locked-in RRIFs are sometimes called life income funds (LIFs) or locked-in
retirement income funds (LRIFs).
Your employer or pension plan administrator can answer any questions you have about locked-in funds._

Whether the income is from an annuity or a LRIF, it is still not elegible for pension splitting until age 65.


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## MoneyGal (Apr 24, 2009)

OGG is right, that's why they call him the Guru (although I admit I *always* read his username as "Original Gangsta Guru"). 

A LIF is somewhat like an annuity in that there are minimum and maximum withdrawals to which you are subject - but unlike an annuity in that there's no guarantee of lifetime income.

In my defense, I did answer her question. I just didn't add the piece about being able to split funds from an RPP *not* generating payments via annuities. I tend to answer the questions in front of me in a very linear way and this forum really exposes that sometimes. Multitasking is the enemy of comprehensive answers on my part.


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## Brian Weatherdon CFP (Jan 18, 2011)

Not to split hairs (hehe, instead of pension income)... I liked MoneyGal's response well enough  OGG I think most employer or pension plan administrators really don't want to address peoples' questions about life income funds. Nor even annuities, for that matter. Best to you all!
BW


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## OhGreatGuru (May 24, 2009)

Brian Weatherdon CFP said:


> Not to split hairs (hehe, instead of pension income)... I liked MoneyGal's response well enough  OGG I think most employer or pension plan administrators really don't want to address peoples' questions about life income funds. Nor even annuities, for that matter. Best to you all!
> BW


You are undoubtedly right. I was just quoting from CRA, who may not have a very realistic view of the world. :rolleyes2:


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## OhGreatGuru (May 24, 2009)

piano mom said:


> I've heard that for those of us under 65, the only pension splitting oportunity is if I'm receiving *annuity payments from a registered pension plan.* ...
> 
> Thanks!


I think part of the confusion here is in the use of the term "annuitants". In this context it is not synonymous with a fixed income annuity purchased for a lump sum from someone like an insurance company (as you might do with your RRSP when it matures). People receiving pension benefits from a registered pension plan are generally referred to as "annuitants" by the plans. For example, I know my own DB plan refers to the benefits as either an "immediate annuity" or a "deferred annuity" as applicable. In that sense such benefits are "annuity payments from a registered pension plan". (They really need to come up with a different word.) This income is reported on Line 115 regardless of age, and anything reported on Line 115 is eligible for pension splitting.


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## MoneyGal (Apr 24, 2009)

Well, an annuity just means a fixed series of payments. I think the confusion is ameliorated if you use the term "life annuity" to mean an annuity with a lifetime income guarantee.


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## caricole (Mar 12, 2012)

> piano mom ..Would I have to buy an annuity with the LIRA funds first? I would prefer to avoid annuities if possible.


The year you attain the age of 55, you can «UNLOCK» 50%» of your LIRA and transfer it to an ordinary RRSP taxfree

At least 50% will give you many more choises and possibilities

The other 50% can be transferred to a RRIF (Restricted Retirement Income Fund)

my opinion


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