Locked-in RRSP

Registered retirement savings plan in into which is transferred money accumulated in an employer-sponsored supplemental retirement plan (widely known as a "pension fund").

For employees who have contributed to a supplemental retirement plan under federal jurisdiction (telecommunications, banks and Crown corporations).

You may convert your locked-in RRSP 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 federal government.
• Can be converted to an annuity or federal LIF.
• May be withdrawn if a physician certifies that your life expectancy is reduced (if the plan provides for it).
• No withdrawals allowed prior to retirement.
• Upon death, locked-in RRSP balance goes to surviving spouse or, under certain conditions, your estate.

Advantages

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

Should I convert my locked-in RRSP immediately at age 55 or wait until I 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 RRSP 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 RRSP conversion deadline. Then you may convert it in whole or in part into retirement income.

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