Locked-In Retirement Account (LIRA) - Quebec

A registered retirement savings plan into which is transferred money accumulated in a supplemental retirement plan (widely known as a "pension fund") set up by an employer.

For employees who have contributed to an employer-sponsored retirement plan in Quebec.

You may convert your LIRA into an annuity or LIF at anytime, but no later than December 31 of the year in which you turn 71.

Features

• Administered by the Régie des rentes du Québec (RRQ).
• Upon death, LIRA balance is turned over to surviving spouse, or in some cases, your estate.
• Only pension fund amounts are eligible.
• No withdrawals allowed before retirement

Advantages

• No minimum conversion age.
• Capital grows tax-free.
• Funds are unseizable.

Under what circumstances may pension funds be transferred into a LIRA?

• An employee leaves his or her job.
• An employee takes early retirement (before age 55).
• The pension plan is abolished.

Under what circumstances can you withdraw funds from your LIRA?

• A doctor certifies that your life expectancy is reduced; the balance may be withdrawn in full or in part.
• You haven't lived in Canada for at least two years; the balance must be withdrawn in a lump sum.
• You are over age 65 and the balance of your retirement funds (other than RRSPs and RRIFs) does not exceed 40% of the QPP maximum pensionable earnings; the balance may be withdrawn in a lump sum.

In all three cases, you may also put the money into your RRSP.

Convert your LIRA immediately at age 55 or wait until you turn 71?

The answer depends on your personal situation but generally, it is better to convert it as late as possible.

You may be able to delay the conversion of your LIRA if you have sufficient income. Your income may come from a variety of sources:

• benefits from a company pension plan
• public annuities
• non-registered savings
• personal income (from, for example, a rental unit or investments)

If you use your other sources of income first, your money can continue to grow tax-free.

However, if you find you need additional cash to pad your budget, you can always move up your LIRA conversion deadline. Then you may convert it in whole or in part into retirement income.

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