LIRA & LIF Calculator / Locked-In Retirement Guide
A LIRA holds locked-in pension money from a former employer. Here’s what makes it different from an RRSP, and how it becomes retirement income through a LIF.
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Locked-in, not a regular RRSP
When you leave an employer with a pension, you can often move your share into a LIRA. It keeps the money tax-sheltered and invested, but “locked-in” rules stop you from simply cashing it out — the intent is to preserve it as retirement income, the way the pension would have.
From LIRA to LIF
By the end of the year you turn 71, a LIRA must become income: usually a LIF (Life Income Fund), sometimes an annuity. A LIF pays at least a minimum each year (same factors as a RRIF) and no more than a maximum set by pension rules. Our RRIF Minimum Withdrawal calculator also handles the LIF minimum; the LIF maximum is jurisdiction-specific.
Frequently asked questions
What is a LIRA (locked-in retirement account)?
A LIRA is a registered account that holds pension money you've moved out of a former employer's pension plan. The word 'locked-in' is the key: unlike an RRSP, you generally can't make withdrawals from a LIRA. The money stays invested and tax-sheltered until you convert it to a retirement income vehicle (a LIF or an annuity), usually by the end of the year you turn 71.
How is a LIRA different from an RRSP?
Both are tax-sheltered registered accounts, and both can hold the same investments. The difference is access: you can withdraw from an RRSP any time (paying tax), but a LIRA is locked — no withdrawals until you convert it to a LIF or annuity, and even then the income is capped by a maximum. LIRAs also can't receive new contributions; they only hold transferred pension money.
How does a LIRA become retirement income?
You convert the LIRA to a Life Income Fund (LIF), or use it to buy an annuity, generally by December 31 of the year you turn 71 — the same deadline as an RRSP. A LIF then pays you income, with both a minimum (the same formula as a RRIF) and a maximum each year set by pension legislation. The annuity option gives a guaranteed income for life instead. See Government of Canada: Life Income Fund.
Why does a LIF have a maximum withdrawal?
Because the money originated in a pension, the rules are designed to make it last through retirement rather than be spent all at once. So a LIF has a maximum annual withdrawal (set by your province or by federal rules, depending on which pension legislation governs the money) on top of the RRIF-style minimum. This maximum is the main thing that distinguishes a LIF from a RRIF.
Can I ever unlock a LIRA and withdraw the money?
Sometimes, under specific 'unlocking' provisions that vary by jurisdiction: small-balance unlocking (if the account is below a threshold), financial hardship, shortened life expectancy, becoming a non-resident, or a one-time partial unlocking at the time of converting to a LIF in some provinces. These rules differ significantly between provinces and the federal regime, so check your specific pension jurisdiction.
Which province's rules apply to my LIRA?
It depends on the pension legislation that governed the original pension, which is usually based on where you worked, not where you live now. Federally regulated industries (banks, airlines, telecom, interprovincial transport) fall under federal rules; most others fall under the province of employment. This determines your LIF maximum and your unlocking options.
Does a LIRA or LIF affect OAS clawback or GIS?
A LIRA itself produces no income, so it doesn't affect OAS or GIS while it stays locked. But once it becomes a LIF, the LIF withdrawals are fully taxable income — they count toward the OAS clawback and reduce GIS, exactly like RRIF income. TFSA withdrawals, by contrast, don't. This matters when planning which accounts to draw from first.