What are the unique features of a LIRA?

A locked-in retirement account (LIRA) allows you to transfer money from a pension fund or a former employer's pension plan to an individual plan. Your funds will continue to grow tax-free until retirement.

Other special conditions to be aware of:

  • The funds transferred into it are locked-in, which means they generally cannot be withdrawn before retirement.
  • Withdrawals are limited and subject to strict rules, with exceptions in certain situations (reduced life expectancy, non-residency in the country for two years, financial hardship, minimal LIRA balance, or death).
  • As retirement approaches, and no later than age 71, the LIRA must be converted into a Life Income Fund (LIF) or an annuity. This allows the accumulated savings to be transformed into a regular retirement income.
  • Upon your death, your LIRA balance will be transferred to your spouse tax-free. If you do not have a partner, your balance will be paid out to your designated beneficiaries or to your estate.

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