Refunding
LIRAs and
LIFs
Note that...
To obtain a cash payment (refund), an application must be made to the financial institution.
All refunds are taxable. However, income taxes can be deferred if the amounts can be transferred directly to an
RRSP or a registered retirement income fund (RRIF). For details, consult the
Canada Revenue Agency .
Refunds for
LIRA and
LIF holders age 65 and over
The entire amount in a locked-in retirement account (LIRA) or life income fund (LIF) can be withdrawn provided the
LIRA or
LIF holder meets the following two requirements:
- He or she is age 65 or over at the end of the year preceding the one in which he or she applies.
- The total
locked-in amounts accumulated in the retirement savings instruments mentioned below are not more than 40% of the maximum pensionable earnings under the Québec Pension Plan for the year of application, that is, $27 400 in 2024.
An
LIRA or
LIF can be refunded at any time, regardless of the date on which the investments mature. Before that date, however, fees could be levied.
To have an
LIRA or
LIF refunded, the
LIRA or
LIF holder must complete
Schedule 0.2 of the
Regulation respecting supplemental pension plans and send it to the financial institution.
Savings instruments affected:
-
LIRAs
-
LIFs
- Defined contribution pension plans or the defined contribution component of a defined benefits pension plan
- Simplified pension plans (SIPPs)
- Locked-in RRSPs
- Voluntary retirement savings plans (VRSPs)
Refunding the balance for non-residents
The
LIRA or
LIF holder can request that the balance of his or her
LIRA or
LIF be refunded in a single payment at any age, if:
Worth knowing about...
- An
LIRA or
LIF cannot be refunded until the date on which the investments mature, unless the contract so permits. Before that date, fees could be levied.
- It is the financial institution's responsibility (not
ours) to ensure that the
LIRA or
LIF holder has not been living in Canada for at least two years. In order to do so, the financial institution must obtain proof that it deems satisfactory.
Refunds when the
LIRA or
LIF holder dies
The balance is paid to the
LIRA or
LIF holder's spouse, or if there is no spouse or the spouse has renounced it, to the heirs.
An
LIRA or
LIF can be refunded at any time, regardless of the date on which the investments mature. Before that date, however, fees could be levied.
The amounts withdrawn are subject to income tax, unless exemptions under taxation rules apply. For details, consult the
Canada Revenue Agency .
Refunds in the event of disability
LIRA holders
An
LIRA can be refunded in full or in part if the
LIRA holder has a physical or mental disability due to a medical condition that reduces his or her life expectancy.
The refund can be made as a lump sum or several payments. It can be made regardless of the maturity date of the investments. Before that date, however, fees could be levied.
To obtain a refund, the
LIRA holder must provide the financial institution with a
medical certificate stating that the
LIRA holder has a physical or mental disability due to a medical condition that reduces his or her life expectancy.
Financial institutions can neither tighten nor loosen those restrictions.
The disability must reduce life expectancy
- Reduced life expectancy does not necessarily mean that the reduction must be significant.
- If the
LIRA holder's health problems do not affect his or her ability to work, the
LIRA holder cannot be deemed disabled.
- The requirements for being deemed disabled are different from those under the Québec Pension Plan.
The medical certificate
The medical certificate must be issued by a physician who is a member of the
Collège des médecins du Québec or, if the physician is outside Québec, he or she must be a member of an equivalent body.
The medical certificate does not have to mention the diagnosis or the actual life expectancy. It merely has to state that the
LIRA holder has a physical or mental disability due to a medical condition that reduces his or her life expectancy. The certificate can be a letter signed by his or her physician. An example follows.
2 January 2024
Mr. Charlie Bailey
7878 Street Avenue
Quebec City, Quebec
G1J 9N9
Subject: Medical certificate
Dear Mr. Bailey,
I hereby confirm that your physical disability due to a medical condition reduces your life expectancy.
Signature :
Dr. Smith, M. D.
Your Medical Clinic
9696 Your Street
Quebec City, Quebec
G1H 2J3
LIF holders
If the
LIF holder is disabled, he or she cannot obtain a refund directly from his or her
LIF. To obtain a refund from his or her
LIF,
LIF holder must transfer his or her
LIF to an
LIRA before the end of the year in which he or she turns 71, and meet the requirements entitling him or her to a refund due to a disabling condition.
Beware of fraudulent withdrawals
We urge the LIF or LIRA holder to be wary of classified ads that propose various tax-free ways to withdraw money from an LIRA or LIF, such as by purchasing stock shares or taking out a loan. Those methods are fraudulent. They can have significant tax effects, and the LIF or LIRA holder could lose his or her money. To find out more, please consult the Fraud in classified ads section on the Autorité des marchés financiers du Québec's website.