Life Income Fund
If you left a job where you had a pension plan, you may have transferred your pension entitlement to a locked-in retirement account (LIRA) or locked-in RRSP (LRSP). Typically, that money cannot be withdrawn until you start retirement.
If you hold a Locked-in RSP (LRSP) or a Locked-in Retirement Account (LIRA), it must be converted to a LIF or LRIF no later than the year you turn 71.
A Life Income Fund (LIF) acts as an extension of a LIRA once you retire. With a LIF, you may periodically withdraw from the accumulated savings in your pension fund and receive retirement income as you need it.
The legislation under which your LIF is regulated requires you by law to withdraw a minimum annual amount. The legislation also sets out a maximum withdrawal amount. Withdrawals are considered taxable income.
A life income fund (LIF) or locked-in retirement income fund (LRIF, RLIF, PRIF) is like a RRIF, but is for money that originally came from a pension plan. The funds are held in either a locked-in retirement account (LIRA) or a locked-in RRSP and then converted to a LIF.
LIFs vary slightly from province to province, and are not available in P.E.I. and the Northwest Territories. Most provinces require you to have reached age 55 before you establish a LIF, but there is no age restriction in New Brunswick, Quebec, and Alberta.
Characteristics and Advantages of a LIF
- You will not be taxed on your investment income, however you will be taxed on your withdrawal amounts
- You may periodically withdraw the funds you need within fixed minimum and maximum annual amount limits
- You receive an income for as long as you live