What Is a Locked-In Retirement Account (LIRA)?

A locked-in retirement account (LIRA) is a retirement savings account that is restricted in terms of how and when funds can be withdrawn. Typically, a LIRA is set up by an employer as part of a pension plan, and funds are transferred into the account from a pension plan when an employee leaves their job.

The restrictions on a LIRA are in place to ensure that the funds are used for retirement purposes only. For example, a LIRA may have a minimum age requirement for withdrawals, and early withdrawals may be subject to penalties. What age can you open a LIF? There is no age limit to open a LIF. You can open a LIF at any age. Is a LIRA considered an asset? A LIRA is a Locked-in Retirement Account, which is a type of retirement savings account that is available in Canada. It is considered an asset for the purposes of bankruptcy. How much tax do I pay on LIRA withdrawal? There are a few different types of retirement savings accounts, each with their own tax rules. The most common type of account is the Registered Retirement Savings Plan (RRSP). Withdrawals from RRSPs are generally taxed as income in the year they are withdrawn.

There are a few exceptions to this rule, such as if the withdrawal is used to buy a first home or to pay for post-secondary education expenses.

The other type of retirement savings account is the Registered Retirement Income Fund (RRIF). Withdrawals from RRIFs are also generally taxed as income in the year they are withdrawn.

The tax rules for RRSPs and RRIFs are different, so it's important to know which type of account you have before making a withdrawal.

If you're not sure which type of account you have, you can check with your financial institution.

Why is a LIRA locked-in?

A Locked-in Retirement Account (LIRA) is an account that is locked-in by provincial pension legislation. This means that the funds in the account cannot be withdrawn until the individual reaches a specified age, usually 55 or 65. The purpose of a LIRA is to provide income for retirement.

There are two types of LIRAs:

1. A Prescribed Retirement Account (PRA) is an account that is established by an employer for its employees. The funds in a PRA are locked-in until the employee retires or reaches the specified age, whichever comes first.

2. An Individual Retirement Account (IRA) is an account that is established by an individual. The funds in an IRA are locked-in until the individual reaches the specified age.

The funds in a LIRA are not taxed until they are withdrawn.

Can you unlock LIRA?

Generally speaking, you cannot unlock a LIRA.

A Locked-in Retirement Account (LIRA) is a retirement savings account that is subject to restrictions imposed by provincial pension legislation. The purpose of these restrictions is to protect the pension benefits that have been accumulated in the account.

There are some limited circumstances in which it may be possible to unlock a LIRA, but these are generally only available in cases of financial hardship. For example, in Ontario, an individual may be able to unlock their LIRA if they can demonstrate that they are facing financial difficulties that are beyond their control and that unlocking their LIRA is necessary in order to alleviate those difficulties.

If you are thinking about unlocking your LIRA, you should speak to a financial advisor to discuss your options and to ensure that you understand the implications of unlocking your account.