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Transfers Affecting an LIF

When looking at federally regulated Life Income Funds (LIFs) there are two basic categories of transfers:

  • transfers into an LIF, and
  • transfers out of an LIF

Transfers into an LIF

Transfers into an LIF is fairly simple and straightforward. Direct? transfers into an LIF are restricted to three types:

  • from an employer’s pension plan
  • from a federally regulated Locked-In Retirement Savings Plan (LRSP)
  • from another LIF that is governed by Federal Pension Legislation

For all three types of direct? transfers, the financial institution that will receive your transferred pension benefits will assist you with opening of the receiving LIF account, the accompanying documents, and the actual transfer process.

For transfers directly from an employer’s pension plan (item (a) above), the employer’s human resources department will provide you will all of the necessary details of your pension benefits and information about your transfer options. They will also supply you with the necessary forms to request the transfer of your pension benefits from the pension plan administrator.

Note: For transfers into another LIF, you may have two or more federally regulated LIF accounts that you would like to consolidate into a single LIF account. Consolidating LIF accounts into a single account is permitted. 

Transfers out of an LIF

When it comes to making transfers out of an LIF, there are basically five types of scenarios where this would happen:

  • transfer to another federally regulated LIF
  • transfer to purchase an Annuity
  • transfer to a registered pension plan (RPP), if the registered pension plan permits such a transfer
  • transfer to a Restricted Life Income Fund (RLIF), to take advantage of the option to unlock up to 50% of your locked-in account
  • transfer back into a Locked-In Retirement Savings Plan (LRSP) if you no longer desire to receive regular payments from your LIF and you are 71 years of age or younger.

Consolidating two or more federally regulated LIF accounts into a single LIF account is permitted. The financial institution administering your LIF can assist you with the necessary documentation and they will help facilitate the transfer process. Keep in mind that when you transfer a LIF account to another account, the transferring financial institution is required to pay out the minimum required annual LIF payment just prior to transferring your LIF account. It does not matter if you do not want to receive the minimum payment at the time of the transfer. The transferring financial institution is required to pay you the full amount of your annual minimum payment.

For transfers from an LIF to purchase a deferred or immediate Annuity, your insurance company or life agent can provide you with all of the documentation and guide you through the process.

To transfer your LIF into another registered pension plan, the pension plan must first be administered according to federal pension legislation and, secondly, the plan must permit outside transfers from an LIF. Check with your current employer to see if a transfer of your LIF into their registered pension plan is possible. If so, their human resources department can help with the necessary documentation.

For those wishing to unlock a portion of their LIF account under the 50%-unlocking option, you must first transfer the LIF into a Restricted Life Income Fund (RLIF). Then from the RLIF you can transfer up to 50% of the fund’s value into an RRSP or RRIF, if you are 71 years of age or younger. If you are older than 71, you can transfer the unlocked portion into an RRIF only.

The remaining 50% of your original LIF assets will be held inside a Restricted Life Income Fund (RLIF), which will then make regular payments to you according to the guidelines set by federal pension legislation. The payment schedule is the same for RLIF and LIF accounts.

Transfers into a Locked-In Retirement Savings Plan (LRSP) are permitted at anytime prior to December 31st of the year that you reach 71 years of age. The financial institution administering your LIF can provide you with the necessary account opening forms, Spousal Consent Waivers and Federal Pension Act addendum.

Note:  If at a future date you no longer need regular withdrawals from your Restricted Life Income Fund (RLIF) and you are 71 years of age or younger, you are permitted to transfer your RLIF into a Restricted Locked-in Savings Plan (RLSP), which is administered by the same federal guidelines that govern Locked-In Retirement Savings Plans (LRSP), with one exception. For an RLSP, there is no 50%-unlocking option available.

Note: If you wish to transfer a portion or all of your LIF account, you will be required to provide written proof that shows your spouse or common-law partner agrees to the transfer of your pension benefits. The written proof is in the form of an attestation by your spouse or common-law partner made before a notary public, commissioner, or another person authorized to take sworn affidavits.

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