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How to free up your locked-in accounts

If you are still working you can use these withdrawals to fund your RSP contributions

Are you 55 or older and have locked-in accounts? Let me start by explaining what locked-in funds are. A Locked-In Retirement Account (LIRA), and the virtually identical Locked-in Retirement Savings Plan (LRSP), are Canadian investment accounts designed specifically to hold locked-in pension funds for former plan members, former spouses or common-law partners, or surviving spouses or partners. Funds held inside LIRAs/LRSPs will normally only become available (or “unlocked”) to holders upon retirement.

If you are age 55 or older you can roll your locked-in account to a LIF and start withdrawing the maximum out each year. If you are still working you can use these withdrawals to fund your RSP contributions, this is essentially a strategy used to unlock this cash without taking a tax hit. This strategy additionally gives you the control of drawing out this cash when you need it without having restrictions on the amount that can be withdrawn.

There are also a number of ways to access locked- in funds prior to age 55 depending on jurisdiction under which your fund is governed and they are:

1. Access to small amounts — Where the owner is 65 or over, the Pension Benefits Standards Act of British Columbia allows small amounts of pension funds held in Locked-in RRSPs and LIFs to be commuted and paid to the owner in a lump sum subject to the following requirements.

2. Shortened life expectancy — Regulations for the British Columbia Pension Benefits Standards Amendment Act allow for an owner to withdraw locked-in RRSP or LIF funds in a lump sum or series of payments if he/she has a disability or terminal illness that is likely to considerably shorten his/her life expectancy.

3. Becoming a non-resident — Has been absent from Canada for 2 or more years and has become a Non-resident of Canada, as determined by the Income Tax Act (Canada).

4. Financial hardship in certain provinces - Effective May 14, 2003, the Employment Pension Plans Regulation was amended to permit the unlocking of funds in LIRAs, LIFs and LRIFs due to financial hardship.

5. Lump sum unlocking in certain provinces – Certain provinces will allow you to unlock a portion of your locked-in account based on certain rules.

Please remember to always consult your investment advisor before taking any action.


Stuart Kirk is a Wealth Advisor with Precision Wealth Management Ltd The opinions expressed are those of the author and may not necessarily reflect those of Precision Wealth Management Ltd. Stuart can be reached at or 250-954-0247. Website