# "locked in" RRSP?



## joncnca

i'm trying to transfer funds from an RRSP at manulife (previous employer) to my personal RRSP account. during the transfer, it shows that most of the amount can be transferred, but there is about $500 that is 'locked-in'.

from some reading, it seems that an RRSP can be 'locked' in so that you can't withdraw from it until age 55, which happens sometimes when you change employers (as i understand it). that's fine, i don't plan to withdraw; i don't even care about unlocking it (i'm 30). but can i not even transfer it out to another financial institution???

i'm an organized guy and i don't want things sitting in different places, that's partly why i'm moving the funds (also because of the high management fees).

thanks!


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## caricole

1) Locked in RRSP Federal jurisdiction: 50% can be UNLOCKED and transfered to a regular RRSP

2) Locked in RRSP Provincial jurisdiction: 500$ could be converted , withdrawn as a pension, but TRANSFERED without tax-implications to a regular RRSP

3) But for both situations, verifie your posibilities because of your age

4) The year you ATTAIN the age of 55 it all changes

http://www.osfi-bsif.gc.ca/osfi/index_e.aspx?ArticleID=2660#1


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## none

Hmm.. I didn't know that - I'm doing that same - moving all that stupid manulife crap over to TDW.


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## Four Pillars

joncnca said:


> from some reading, it seems that an RRSP can be 'locked' in so that you can't withdraw from it until age 55, which happens sometimes when you change employers (as i understand it). that's fine, i don't plan to withdraw; i don't even care about unlocking it (i'm 30). but can i not even transfer it out to another financial institution???


Yes, a locked-in account can still be transferred to a different institution as long as it is transferred to another locked-in account. Your situation has nothing to do with the locked-in withdrawal rules.

You need to call the plan administrator to find out what the deal is. Is it possible that some of the money was a result of employer matching and has to remain in place until a certain amount of time has passed? Or maybe it's an error? 

Call them.


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## caricole

1) Moneys contributed UNDER 2 years, can be transferred to a regular RRSP

2) Moneys contributed OVER 2 years ago. become "VESTED" and become "LOCKED IN" up and till the age of retirement

3) For this reason, anybody leaving his employement lets say after 5 years, a portion of his pension contributions can be transfered to a regular RRSP, and another portion can only be transfered to a "LOCKED IN RRSP" :upset:


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## joncnca

ok i've contacted the plan advisor but haven't heard back yet, maybe he's away with kids for march break.

if a portion of the RRSP is indeed locked in, does that mean i will need to submit two separate requests for transfer (questrade is the recipient); one for the unlocked and one for the locked in portion?

does anyone know if questrade offers locked in rrsp accounts? would it be transferred to a locked in retirement account (LIRA)? the website isn't very clear about this. i imagine that this might require 2 separate requests, correct?

thanks!


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## none

I just found out this happened to me 17K locked in and 12 non-locked in. It's actually just annoying because now I have to open a 'special locked in RRSP' to deal with it making asset allocation that much more jumbled. Annoying. Manulife can suck my balls.


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## My Own Advisor

@none,

That sucks, but you should be able to move your locked-in account (LIRA) around to your institution of choice.


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## none

I did move it to TDW, it's just a pain to manage another account and to allocate things efficiently in a tax sense. No huge deal just annoying because I plan on keeping all my RRSP for retirement anyway. What am I going to do with it? Buy a house?  NOPE.


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## MoneyGal

LIRAs arise because of the tax rules w/r/t the employer's contributions - they aren't the result of anything the employer or financial institution is or is not doing.


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## none

I know, that was a bit off topic. To be honest, it's kind of great because I suppose the locked in portion was my employers contribution. I only have so much hatred for free money.


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## My Own Advisor

Ha, as you should. If it makes you feel any better, I have a LIRA as well from my previous employer. I keep some U.S. stocks there


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## Eclectic12

MoneyGal said:


> LIRAs arise because of the tax rules w/r/t the employer's contributions - they aren't the result of anything the employer or financial institution is or is not doing.


I'm wondering whether it is the employer's contributions or a registered pension plan?
A pension specialist's post said a LIRA could only be generated from a pension. Then too, this tax tips link seems to be saying employers contributions to a Group RRSP won't result in a LIRA.

http://www.taxtips.ca/pensions/grouprrsp.htm



> Vesting
> 
> It is much more difficult to vest funds employer funds in a group RRSP. Once the employer makes a contribution into the employees plan, those funds are then owned and controlled by the employee. Technically, the employee has the right to withdraw the funds, pay the tax and use the money for whatever purpose they want. There are ways to design the plan to minimize the temptation to withdraw the funds.


http://groupbenefitsonline.ca/lots-to-know-about-group-rrsps/


I've never had employer matching in anything but a pension so I have no easy way to confirm and it is curiosity on my part.


Cheers


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## Eclectic12

My Own Advisor said:


> ... If it makes you feel any better, I have a LIRA as well from my previous employer. I keep some U.S. stocks there


So do I get a prize for having two LIRA's?

I suppose I did get a bit of a prize with the first LIRA as my co-worker left six months before I did. That meant he lost his RRSP contribution room whereas by the time I left, the gov't had introduced the pension adjustment reversal (PAR) to give back some RRSP contribution room.

http://www.fiscalagents.com/newsletter/4penadj-par.shtml


Cheers


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## MoneyGal

Eclectic12 said:


> I'm wondering whether it is the employer's contributions or a registered pension plan?
> A pension specialist's post said a LIRA could only be generated from a pension. Then too, this tax tips link seems to be saying employers contributions to a Group RRSP won't result in a LIRA.


LIRAs arise from registered pension plans (only). My comment was about *why* a LIRA might exist: Although the contributions to an RPP from an employer belong to the employee, under provincial/territorial/federal pension legislation (depending on where you live/where your pension is registered) they must be used to create a stream of income in retirement. 

Some RPPs are funded entirely by the employer with no direct employee contributions. Hence only the employers' contributions are regulated in the process of converting an RPP to a LIRA. (Although, if you have a LIRA, you can't unlock "just" your contributions.) "Retirement" is defined in pension legislation. 

RRSPs, in contrast, are not required to be used to provide a stream of income in retirement. They are "designed" to do so, but there is no requirement that the funds in an RRSP be held until retirement. 

This is a complex area and the use of the word "pension" to describe multiple, distinct things is confusing. Something I wrote on this issue once upon a time: http://www.thestar.com/opinion/2010...t_a_pension_well_youd_better_think_again.html


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## joncnca

joncnca said:


> ok i've contacted the plan advisor but haven't heard back yet, maybe he's away with kids for march break.
> 
> if a portion of the RRSP is indeed locked in, does that mean i will need to submit two separate requests for transfer (questrade is the recipient); one for the unlocked and one for the locked in portion?
> 
> does anyone know if questrade offers locked in rrsp accounts? would it be transferred to a locked in retirement account (LIRA)? the website isn't very clear about this. i imagine that this might require 2 separate requests, correct?
> 
> thanks!


so...uh....anyone have any answers for me? =)

i can infer that you mean my locked in rrsp CANNOT be moved into a questrade LIRA, but i'm not clear based on the responses. thanks!


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## My Own Advisor

Joncnca,

You should be able to move your locked-in RRSP between financial institutions, as long as the financial institution has a locked-in account/LIRA.

You simply cannot contribute funds to this account. Also, you can't withdraw from this account; only in certain circumstances.


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## bariutt

*Manulife RRSP Plans*

I used to have a savings and RRSP plan with Manulife through my employer. Worst customer service I ever encountered. Once I retired I wanted to transfer all of my funds to a TD Waterhouse account. Getting my money out of Manulife was like pulling teeth. Both I and my bank manager spent many hours dealing with Manulife (that had all of these plan rules that plan holders were never informed about) trying to withdraw funds. My bank manager told me that every customer that she dealt with that had the same savings and RRSP plan with Manulife struggled with the same probleM. I WOULD NEVER HAVE ANY INVESTMENTS WITH MANULIFE IF MY LIFE DEPENDED UPON IT.


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## Eclectic12

joncnca said:


> so...uh....anyone have any answers for me? =)
> 
> i can infer that you mean my locked in rrsp CANNOT be moved into a questrade LIRA, but i'm not clear based on the responses. thanks!


The first item is to get your plan advisor to confirm that the $500 that is "locked-in" is money coming from a pension.

This is a question in my mind as when I left my DB pension, I was provided with a letter providing options that spelled out that the locked-in part of mine was the employers contributions + my contributions to total amount $X and the RRSP transfer portion was additional contributions I'd made for a second amount of $Y. 

The $500 sounds so small that it makes me wonder if it's more of a "you'll pay a huge penalty for redeeming before x months have gone by" instead of "locked-in" that a pension will introduce.


Once you've determined that, let's says the result is $Z that can be transferred to an RRSP and $500 that is locked-in. 

For the $Z amount, you'll need to fill out a regular RRSP transfer form (a T2033 form if I recall correctly) for the $Z amount (assuming the Questrade RRSP account already exists).

For the locked-in $500, the options will vary depending on whether it was a federal or provincial pension.


> For example, a person living in Ontario the day they terminate their employment will have their funds under Ontario jurisdiction. Even if this person moves to British Columbia and transfers their pension funds, the client must open a LIRA (the name for a locked-in plan for Ontario) and not an LRSP because the funds are still under Ontario jurisdiction.


http://www.greenardgroup.com/account_types/locked-in_accounts/

From what's been posted, it sounds like it's an Ontario pension - in which case a Questrade LIRA will need to be opened and a separate transfer form filled out for the locked-in $500. 

In my case, I was able to sit in a office where the TDW rep did both the form to open the LIRA plus the transfer form at the same time (including any required photocopies of documentation etc.). With Questrade being more of an online shop, I'm not sure what the options to help outline the process and the forms required. It might be easier to follow by getting the LIRA setup first and then do the forms for the transfer. Maybe someone who is Questrade customer with more direct experience can provide suggestions.


I am confident Questrade allows LIRAs as I found on their web site:


> Locked-in retirement account
> 
> It’s your future. Take control of it. When you terminate your membership in an employee-sponsored pension plan, transfer your funds to a LIRA. Keep your money, investments, and future in your hands.


http://www.questrade.com/trading/registered_accounts.aspx



Cheers


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## joncnca

thanks a lot, Eclectic12!

your responses are always so thorough and are much appreciated.

my plan advisor seems to be somewhat elusive as of late...or maybe he's just catching up, if he was away last week. 

i also suspect that the $500 is a "you'll pay a huge penalty for redeeming before x months have gone by" type of locked in, but i have not made any contributions for nearly 4 months....so i'm curious as to how long i would need to wait to finally transfer this amount (if this is the case).

it shouldn't be pension locked-in, because it's not a pension. it's an employer matched RRSP, although i do see that sometimes employers will lock in an RRSP when the worker leaves for new employment elsewhere.

so it seems that a LIRA is only for locked in DB pension? is that right?

if it's locked in RRSP, does this also get moved to a LIRA or it must get moved to another locked-in RRSP, and if so, does questrade offer locked-in RRSPs?

thanks!


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## BigMFfan

joncnca said:


> it shouldn't be pension locked-in, because it's not a pension. it's an employer matched RRSP, although i do see that sometimes employers will lock in an RRSP when the worker leaves for new employment elsewhere.
> 
> so it seems that a LIRA is only for locked in DB pension? is that right?
> 
> if it's locked in RRSP, does this also get moved to a LIRA or it must get moved to another locked-in RRSP, and if so, does questrade offer locked-in RRSPs?
> 
> thanks!


Definitely, a LIRA can be for defined contribution plans as well. When I left a previous employer, I transferred the value of my defined contribution pension plan to a LIRA (I had the choice to leave it where it was, but felt that I could do a better job cheaper managing it myself). It sounds as if you are also talking about a defined contribution plan, so you probably will have to transfer it to a LIRA.


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## Eclectic12

joncnca said:


> ... it shouldn't be pension locked-in, because it's not a pension. it's an employer matched RRSP, although i do see that sometimes employers will lock in an RRSP when the worker leaves for new employment elsewhere ...


That's where I'm having difficulty identifying exactly when an employer RRSP would be locked-in.




joncnca said:


> ... so it seems that a LIRA is only for locked in DB pension? is that right?


No ... a defined contribution (dc) pension will also result in a LIRA.



> DC plan members may also have the option to keep their funds invested in the plan when they leave the company. If they take the lump sum, it will be put into a locked-in retirement account.


http://www.moneysense.ca/2012/04/02/income-that-lasts-a-lifetime/




joncnca said:


> if it's locked in RRSP, does this also get moved to a LIRA or it must get moved to another locked-in RRSP, and if so, does questrade offer locked-in RRSPs?


In terms of not being able to withdrawn the money until retirement, a locked-in RRSP is a LIRA. As per the questrade link I posted, they offer LIRAs.

Basically whatever is not locked in (i.e. are regular RRSP) is an RRSP to RRSP transfer. Usually whatever money on leaving that is referred to as locked-in has to be transferred to a locked-in account (or LIRA).



> LRSP (Locked-in Retirement Savings Plan) Account or LIRA (Locked-in Retirement Account)
> 
> If you leave an employer before you have reached retirement age, you may have to transfer the assets in your employer-sponsored Group Retirement Savings Plan (GRSP) or pension plan to a Locked-in Retirement Savings Plan. Depending on the applicable provincial pension legislation, this plan may be called an LRSP or a LIRA.


https://www.phn.com/Default.aspx?tabid=100


Cheers


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## My Own Advisor

This is what happened to me: DC (defined contribution) pension resulted in my LIRA. I suspect this happens to others as well.


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