{"id":729861,"date":"2026-06-11T13:59:43","date_gmt":"2026-06-11T13:59:43","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/729861\/"},"modified":"2026-06-11T13:59:43","modified_gmt":"2026-06-11T13:59:43","slug":"managing-a-clients-lira-as-part-of-a-broader-retirement-portfolio","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/729861\/","title":{"rendered":"Managing a client\u2019s LIRA as part of a broader retirement portfolio"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Advisors can help clients determine the right time to withdraw from a life income fund as part of their retirement income plan.baona\/iStockPhoto \/ Getty Images<\/p>\n

Most Canadians have a mix of retirement savings accounts, including workplace pensions, registered retirement savings plans (RRSPs), tax-free savings accounts (TFSAs) and non-registered accounts. <\/p>\n

But a growing number of Canadians also have the less-discussed locked-in retirement account (LIRA), which has its own set of rules to consider as part of a broader retirement portfolio. According to Statistics Canada, about 1.34-million Canadian families had a LIRA in 2023, up from 1.02 million in 2012.<\/p>\n

LIRAs are accounts Canadians need to set up when they leave a job with a pension and invest the commuted value with a financial institution \u2013 either because they\u2019re too young to start receiving the pension benefits or they choose to invest the funds on their own or with their advisor.<\/p>\n

LIRAs are becoming more common as younger people change jobs more frequently and amid the rise of do-it-yourself investing. Still, many LIRA holders are confused about how they work, including the difference between the locked-in accounts and RRSPs, says Jason Heath, managing director with Objective Financial Partners Inc. in Markham, Ont.<\/p>\n

\u201cMost people who have them are unsure how to take a withdrawal. That\u2019s where I find people get stuck,\u201d he says.<\/p>\n<\/p>\n

LIRAs vs. RRSPs<\/p>\n

LIRAs are similar to RRSPs, but they\u2019re locked in, which means investors can\u2019t make contributions. There are also restrictions on withdrawals.<\/p>\n

Investors can\u2019t withdraw money from a LIRA until the age of 55 \u2013 not even for the home buyers\u2019 plan or the lifelong learning plan, which are tax-free withdrawal programs under the RRSP. <\/p>\n

However, there are exceptions that allow investors to take money out of a LIRA early, including having a shortened life expectancy, an account value below a certain threshold (which varies by province), becoming a non-resident of Canada, or proving financial hardship. <\/p>\n

\u201cWhere a lot of people get mixed up is the financial hardship part,\u201d Mr. Heath says. \u201cWe\u2019re talking about very serious financial hardship. It\u2019s not just, \u2018I need some money.\u2019 It\u2019s more like, \u2018I can\u2019t afford to pay medical expenses, I\u2019m about to get evicted for not paying rent, or my mortgage is about to be foreclosed.\u2019\u201d<\/p>\n

Unlocking eligibility is determined by the pension legislation governing the LIRA. Most plans are provincially regulated, but some are federal, depending on where the pension originated, Mr. Heath notes.<\/p>\n

LIFs vs. RRIFS<\/p>\n

LIRAs also differ from RRSPs when it\u2019s time to withdraw the funds.<\/p>\n

While an RRSP can be converted to a registered retirement income fund (RRIF) at any time before the age of 71, the earliest age a LIRA can be turned into a life income fund (LIF) depends on the province the investor lived in at the time they left their employer.<\/p>\n

Like an RRSP and a RRIF, a LIRA must be converted to a LIF by the end of the year the investor turns 71. Retirees also have the option to transfer some or all of the funds in a LIRA to an annuity. <\/p>\n

Similar to a RRIF, there are minimum annual withdrawal amounts for a LIF, based on age and account value. However, LIFs also have a maximum withdrawal limit set by the pension jurisdiction governing the plan.<\/p>\n

In some provinces, such as Ontario, it may be possible to convert a LIRA into a LIF first, then transfer the eligible 50 per cent to an RRSP or RRIF. This \u201cunlocking\u201d of locked-in funds can provide more flexibility with future withdrawals, Mr. Heath says.<\/p>\n

LIRA decumulation strategies<\/p>\n

Advisors can help clients determine the right time to withdraw from a LIF as part of their broader retirement income plan, says Howard Kabot, vice-president, financial planning at RBC Wealth Management in Toronto.<\/p>\n

\u201cTraditionally, we\u2019ve always said, \u2018Leave your registered monies alone because they\u2019re growing tax-deferred,\u2019\u201d Mr. Kabot says. \u201cHowever, with locked-in accounts, it\u2019s a bit different because you don\u2019t have as much flexibility.\u201d<\/p>\n

In many cases, his advice to clients is to prioritize withdrawals from a LIF first, before other accounts, while considering the minimum and maximum amounts allowed.<\/p>\n

Although taxes on LIF withdrawals are treated as regular income, similar to an RRSP withdrawal, \u201cat least you have access to the money,\u201d Mr. Kabot says.<\/p>\n

One option he recommends is to put the money taken out of a LIF into a TFSA (within contribution limits), where it can grow tax-free. <\/p>\n

\u201cIt\u2019s one strategy to consider,\u201d he says. \u201cEspecially if you\u2019re uneasy about the fact that it\u2019s restricted and you want access to it.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Advisors can help clients determine the right time to withdraw from a life…\n","protected":false},"author":2,"featured_media":729862,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[1397,45,49,48,133,5266,2922,131,132],"class_list":["post-729861","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-appwebview","tag-business","tag-ca","tag-canada","tag-finance","tag-globe-advisor","tag-noastack","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/729861","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=729861"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/729861\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/729862"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=729861"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=729861"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=729861"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}