# Can I unlock an LI-RRSP at age 55?



## TomB19 (Sep 24, 2015)

At 55, can I transfer the assets of my LI-RRSP to my RRSP?


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## Dufresne (Mar 4, 2015)

I can only speak to the rules in my province (Ontario). We have a one-time option, within 60 days of conversion to an income product (LIF, annuity, etc.) to unlock 50% of the LIRA and slide it over to a RRSP. Conversion can happen after age 55. Hardship rules are the only alternative to this.


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## twa2w (Mar 5, 2016)

Rules for this are determined by what jurisdiction the originating pension was set up under. This could be one of the provinces, or federally. It does not matter the province you worked or lived in.
Check in your documentation or with your Li-rsp provider to get the jusidiction. Your provider should know the rules for conversion or be able to get them 
There are lots of sources on the Web although make sure your sources are current as rules for many areas have changed in last few years...
Cheers
J


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## avrex (Nov 14, 2010)

@TomB19, assuming that you have a Saskatchewan company based LIRA, then this LIRA cannot* be unlocked and moved to your RRSP.

* (It can only be unlocked under one of these rare exceptions: it's a small amount; or you have left Canada; or you are dying soon.)

If your LIRA happens to be with the federal government, then yes, at age 55 you can convert 50% of your LIRA to an RRSP.


My article : Locked-in Retirement Accounts – A Road Map


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## My Own Advisor (Sep 24, 2012)

avrex said:


> @TomB19, assuming that you have a Saskatchewan company based LIRA, then this LIRA cannot* be unlocked and moved to your RRSP.
> 
> * (It can only be unlocked under one of these rare exceptions: it's a small amount; or you have left Canada; or you are dying soon.)
> 
> ...


+1


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## Eclectic12 (Oct 20, 2010)

+1 ... where the jurisdiction will matter.


A important side note that while "LI-RRSP" may be useful to describe part of how it works, I suspect you mean a "locked in retirement account" or LIRA.

Two important differences from an RRSP are that no contributions are allowed to LIRA (i.e. it is the proceeds from a pension that is transferred in/setup once) and it can't be withdrawn from except in specific situations (ex. to setup a RRIF or annuity contract). An RRSP on the other hand can be contributed or withdrawn from at any time, subject to the rules.


Cheers


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## heyjude (May 16, 2009)

As others have said, it depends on the jurisdiction. Such a fund may come under federal or provincial rules. I had a LIRA set up in Manitoba and at age 55 was able to unlock 50% of it to a PRSP (prescribed RSP) and the other 50% to a LIF.


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## Eclectic12 (Oct 20, 2010)

I haven't heard of a "prescribed" RSP before. Is it something like a RRIF?


Thanks


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## TomB19 (Sep 24, 2015)

avrex said:


> @TomB19, assuming that you have a Saskatchewan company based LIRA, then this LIRA cannot* be unlocked and moved to your RRSP.
> 
> * (It can only be unlocked under one of these rare exceptions: it's a small amount; or you have left Canada; or you are dying soon.)
> 
> ...


Fantastic article and flow chart. Thank you!

I should have mentioned it's a federal Li-RRSP.

I assumed I would be allowed to transfer those funds to a RRIF one day so this casts a pale, urine yellow colored, new light on this. The only upside is that it's a relatively small amount of money (but too much to be eligible to transfer out without penalty).


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## heyjude (May 16, 2009)

Eclectic12 said:


> I haven't heard of a "prescribed" RSP before. Is it something like a RRIF?
> 
> Thanks


My bank calls it a PRSP, but I believe the legal term for it is a prescribed RRIF. The key is that it is not locked in. I could take it all out at once if I chose to, or take it out in chunks, as I *prescribe.*

Read all about it at this link:

http://www.gov.mb.ca/labour/pension/faq/overview/unlockingfunds.html

Specifically: "A RRIF is a personal retirement income fund as defined in the Income Tax Act (Canada). *A prescribed RRIF is the same as a RRIF, except that it is also subject to certain rules set out in Manitoba's act and regulations. Funds in a prescribed RRIF are not locked in.*"

Different jurisictions have different laws and use different terms, which is why he OP needs to research the rules in his or her own province or territory.


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## Eclectic12 (Oct 20, 2010)

TomB19 said:


> ... I assumed I would be allowed to transfer those funds to a RRIF one day so this casts a pale, urine yellow colored, new light on this...


Technically, yes. However, the article says:


> ... LRSPs are also mandated for all federally regulated pension plans, regardless of province ...
> 
> To help us better understand locked-in plans, you can think of:
> – a LIRA/LRSP as being similar to a RRSP, but with additional restrictions.
> ...


It sounds like whatever unlocking you can take advantage of, you should. This minimises the number of restrictions. For what you can't unlock, it sounds like choices that would be similar to a RRIF are available.

The question seems to be whether the additional restrictions causes any problems for your retirement plan and if there should be any adjustments on the RRSP/RRIF side to help with any issues.


Or am I missing something?

Cheers


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## twa2w (Mar 5, 2016)

Here are the rules for unlocking federal lrsp.
All Ages	
1- Financial hardship: If you are experiencing financial difficulties because of low income, and/or high medical or disability-related costs relative to income.
2-Non-residency: If you have ceased to be a resident of Canada for at least 2 consecutive calendar years, and you are no longer employed by the employer from which the pension funds originated.
3- Shortened life expectancy: If you have a shortened life expectancy (as certified by a physician) due to physical or mental disability.
Age 55 and Over	
1- One-time up to 50% unlocking: In the calendar year you turn 55 or in any subsequent year, you are allowed to transfer 50% of your funds into a tax-deferred savings vehicle, from which you can then withdraw cash.
2- Small balance unlocking: In the calendar year in which you turn 55 or in any subsequent year, if your total locked-in holdings are below the minimum threshold - 50% of the YMPE or $27,450 in 2016 (the YMPE in 2016 is $54,900) -- you are able to unlock the total value of your locked-in funds

Once you convert the lrsp to an lrif, you are subject to a minimum withdrawal amount annually just like a regular rif, but with the lrif there is a limit as to the most you can draw in a year unlike a rif where you can take as much as you want over the minimum.
Hope this helps
J


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## TomB19 (Sep 24, 2015)

Very heplful, twa2w.

Thank you and thanks to all who replied.


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## gibor365 (Apr 1, 2011)

Similar rules for ON LIRA
•	after December 31, 2010, you transferred money into an Ontario life income fund that is governed by the requirements of Schedule 1.1 and, within 60 days of this transfer, you want to withdraw or transfer up to 50% of the total money that was transferred to the Schedule 1.1 LIF (use Form 5.2)
• you are at least 55 years old and the total value of the funds in all of your locked-in accounts is less than 40% of the Year's Maximum Pensionable Earnings (YMPE)

YMPE = $54,900
My understanding that you can unlock 100% of LIRA if it less than: $43,920

First you transfer to RRSP/RRIF 50 -> $21,960
and 2nd half of it you unlock as Small balance unlocking rule: 54,900 x 0.4 = 21,960

Am I correct?

Another question if I can transfer or unlock LIRA where i hold stocks Or I need first sell all stocks to have cash?


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## heyjude (May 16, 2009)

gibor said:


> Another question if I can transfer or unlock LIRA where i hold stocks Or I need first sell all stocks to have cash?


In-kind transfers will be fine. No need to sell any securities.


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## gibor365 (Apr 1, 2011)

heyjude said:


> In-kind transfers will be fine. No need to sell any securities.


But it can be tricky....let's say, I hold 100 of RY , in order to get 40% of YMPE or 50% of market value, lets say I need to sell 40 shares of RY, but price always changes, so it cannot be exact amount, right? Also are looking at MV at specific date like Jan 1 or Dec 31 previous year?
I, actually, own in my LIRA only RY and VEA and my MV very likely will be just right to unlock 50% and than 40% YMPE and transfer all to RRSP/RRIF


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## Eclectic12 (Oct 20, 2010)

^^^^

I expect the FMV value would be on the day it is transferred, just like getting to choose the transfer price for shares going into a TFSA or RRSP based on what the shares have traded for from the opening to when the transfer is being recorded.

Selling does have the advantage of knowing the exact dollar amount and disadvantage that where one wants to keep owing the stock, one will have to re-buy.

From what I have read of posts, people who want to keep the shares will usually build up some cash in the same account. That way, say 90 RY shares gets one to 38% of the YMPE. Requesting 90 RY shares plus whatever cash is needed for the remaining 2% means one would keep owning the stock while being able to hit the *exact* desired number of 40%.

It takes work and planning as well as monitoring the possible FMV but it does avoid needing to pay a second commission and the uncertainty of what the re-buying price.


Now if one can sell high then re-buy low, selling for cash might be preferred.


Cheers


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## Eclectic12 (Oct 20, 2010)

gibor said:


> ... My understanding that you can unlock 100% of LIRA if it less than: $43,920
> 
> First you transfer to RRSP/RRIF 50 -> $21,960
> and 2nd half of it you unlock as Small balance unlocking rule: 54,900 x 0.4 = 21,960
> ...


It sounds like one would need to make sure the transfer to LIF then have the first 60 days withdraw/transfer completed first.
If the forms are filed at the same time, I expect that the total would be more than the 40% required for the "total value of the funds in all of your locked-in accounts is less than 40% of the Year's Maximum Pensionable Earnings (YMPE)" criteria.

It says the multiple criteria can be used so it reads like it would work. I'd want to confirm it though.


Cheers


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## Retired Peasant (Apr 22, 2013)

You could try transferring it between institutions a couple of times; it just might get unlocked:wink:

(the big 5 are particularly stupid about this)


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