How To Unlock An Ontario Locked-In Retirement Account – LIRA, LRIF – 2015 Rules

by Mike Holman

One question which I’ve received several times recently, is how to unlock funds in an Ontario locked-in retirement account such as a LIRA, LRIF. I did this for my Dad a couple of years ago and successfully unlocked his LIRA. Ironically, he never should have had a LIRA – it must have been an RRSP contribution that got set up in error at some point.

How to unlock an Ontario locked-in retirement account

There are a number of ways to unlock your Ontario locked-in retirement account. This includes LIRA and LRIFs which are basically locked-in RRSPs and RRIFs.

If you are 55 years of age or at an age where you would have been eligible for a pension from the originating pension plan (whichever is less) then you can do the following:

  1. Transfer the LIRA or LRIF to a LIF (Life Income Fund) account. This LIF account will be considered a “new” LIF account. You will have to instruct your financial institution to do this step.
  2. You are allowed a one-time 50% unlock from the LIF account. This means you can request for a transfer of half the account value to an RRSP or RRIF account or just withdraw the money from the LIF.  This unlock has to be completed within 60 days of the creation of the new LIF account.  Do not delay!

When you complete the unlock, the money is treated as taxable income for that year.  If you transfer to a RRSP, you will receive a contribution receipt which will offset the transfer amount.

Here are some other methods which can also be utilized:

Small account balance

If you are at least 55 years old and the total value of all money held in every Ontario locked-in account you own is less than $19,320 (for applications signed in 2011), you can apply to withdraw or transfer all the money in your Ontario locked-in account. Use this form.

Regular withdrawals

If you are 55 years of age or older, you can get limited annual payments from a LIF account. Convert your LIRA or LRIF to a LIF account and then request the maximum payment allowed. This link shows the calculation of the maximum payments allowed per year. The formula is needlessly complicated and is probably irrelevant for most investors. Just ask for the max!

Financial hardship

You are allowed to unlock money if you qualify under one of the financial hardship rules, even if you are under 55 years of age. If you think you might qualify – fill out one of the Form 6 or Form 6.1 (for low income) and follow the instructions on the form. If successful, you will receive a letter from the government which you give to your financial institution to unlock the account.

Here are the financial hardship criteria:

  • Withdrawal Based on Low Income – Your expected total income from all sources before taxes for the 12 months following the date you sign the Application is less than $32,200.  Use Form 6.1.  Note, you can also use Form 6 for low income as well.
  • Withdrawal for a Debt Against Your Principal Residence – You need money to avoid legal action or eviction from your principal residence due to unpaid mortgage payments or property taxes.
  • Withdrawal for Unpaid Rent – You need money to avoid eviction from your principal residence due to unpaid rent
  • Withdrawal for First and Last Months Rent – You need money to pay first and last months? rent, to rent a place to live.
  • Withdrawal for Medical Expenses – You, your spouse or a dependent need money to pay for medical expenses and/or dental expenses to treat an illness or physical disability that any of you have.
  • Withdrawal for Renovations to Your Principal Residence – You, your spouse or a dependent needs money to pay expenses to renovate your current or future principal residence to accommodate an illness or physical disability that any of you has.
  • Withdrawal for Renovations to a Dependent’s Principal Residence – You, your spouse or a dependent need money to pay expenses to renovate that dependent’s current or future principal residence to accommodate an illness or physical disability that the dependent has.

Shortened life expectancy

If your life expectancy is two years or less and you have a signed statement from a doctor, you can apply to unlock your money. Use this form.

Non-resident of Canada for two years

If you are a non-resident of Canada and your departure from Canada took place at least 24 months ago, you can apply to withdraw all the money from your Ontario locked-in account. Use this form.

How is the province of regulation determined?

Regulation for locked-in retirement accounts is provincial, with the exception of some larger companies which are federally regulated. The province where the income was earned and pension contributions made is the province that will regulate the LIRA. The province where the investor currently lives is irrelevant. Please contact the plan administrator to verify the applicable province.

Also – the financial institution where the LIRA or LRIF is being held, should know the province of regulation.

Combine different criteria to unlock your money

In my Dad’s case, he was able to unlock his entire LIRA account by completing the following steps:

  1. Transferred the LIRA to a LIF account.
  2. Do a 50% unlock  (actually he had to do two 25% unlocks, since the 50% unlock option was unavailable at the time).
  3. Transfer the unlocked 50% to his RRSP.
  4. Complete two annual allowable payments.  These were fairly small – about 4% of the account value each, but they helped lower the account balance.
  5. Unlock the remaining funds by using the small account rule.

What is a LIRA

LIRA stands for locked-in retirement account. This is basically an RRSP account that is locked-in and you can’t make any withdrawals until the age of 55.

What is an LRIF

LRIF stands for locked-in retirement income fund. This is basically a RRIF account that is locked-in.  A LIRA must be converted to a LRIF by the end of the year in which the account holder turns 71.

How is a LIRA created?

Employees who work for a company that offers a defined benefit pension plan (such as the government), will build up pension credits over time. If the employee should leave the job, they have a choice of:

  • Leave their accumulated pension credits in the pension plan and collect a pro-rated pension at retirement age.
  • Transfer the “commuted” value of their pension credits to a locked-in RRSP account which is called a LIRA (Locked-In Retirement Account)

If they are close to retirement age, option 2 is usually not available.

Are withdrawals from a LIF or RRSP or RRIF taxable?

Yes, they are.  Any withdrawals from a LIF, RRSP or RRIF will be considered taxable income for that year.  The financial institution will hold some tax back at the time of the withdrawal.

More information

Government of Canada – Please release all locked-in retirement money

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{ 33 comments… read them below or add one }

1 Sustainable PF

Now this article is why I read PF blogs and specifically this site. Thanks Mike.
I’m not entirely sure where my parents have their money but if it is stuck in LIRA or LRIF this will help immensely.

2 Adam

Thanks for this! I’ve got a LIARA but never really understood what the rules were aside from not having access for ~30 years. Since mine is fairly small (though not under the government definition of small) I’ve used it as a fund to invest in higher risk securities since I’ve basically got no choice but to leave it til 55.

3 Marypat

Would anyone know if Nortel was provincially or federally regulated (for Ontario employees)? We have a LIRA from them and I would like to know how to access it when the time comes. Also, do you know if the rules still state that any balances in a LRIF must be turned into an annuity when the plan holder turns 80? Thanks!

4 Mike Holman

@SPF – Thanks!

@Adam – Yes, the government’s definition of “small” is quite small indeed.

5 Mike Holman

@Marypat – I don’t know about Nortel, but I do know that you do not have to convert LRIFs to annuities at age 80.

6 Kim D

Timely for me as I turn 55 and have a LIRA. Thx.

7 My Own Advisor

Great article Mike!

I have a LIRA, looking forward to taking the chains off it at 55.


8 Glenn Cooke

Wow. This article was over the top. I bet most people didn’t realize you could unlock a locked in account. I knew you could under some circumstances – but hadn’t realized that you could do so in such a variety of fashions.

Mike, we also bought your RESP book. It was worth the money – simple, easy to read, and it paid for itself in the first hour I read it!

9 Mike Holman

@Glenn – Thanks -a very nice comment. :)

10 Paul (@beanie1972)

Hi Mike…I worked for RBC back when it was called Royal Bank and left with a small pension ($1200 now worth $1500) back in 1998 which is in a LIRA. I worked the whole time in ON so my question is it governed by ON or Federal rules?

Thanks you for your help.



11 Mike Holman

Hi Paul. According to the book “The Pension Puzzle” which I just bought – all pensions for chartered bank employees are regulated by federal rules.

It appears that the federal rules are pretty similar to the Ontario rules, so you should be able to unlock it when you turn 55.

Here is a summary of the federal rules (near the bottom of the page)

I should probably do a post on unlocking federal-regulated pensions – they are probably very common.

12 Eclectic Investor

@ Open source portfolio

Re: I want to give up my pension for that extra sweet space in my RRSP. They said no.

I’m not surprised, especially if it is a defined benefit pension. The more members (and bigger the investment portfolio), the easier it is to keep costs in check and deliver the pension. There are only two situations where I’ve had flexibillity with a pension. The first was a company that allowed joining the db pension after the first year and before the start of the eleventh year (most companies requiring joining in the second year). The second is after quiting where the options were leaving the pension intact/capped or transferring to a LIRA/RRSP (LIRA for the employer plus a small part of my contributions with the remainder into an RRSP).

The situation that was talked about with HR is different – where you are trying to quit th pension plan. I’m not aware of any employer or any plan that allows this for the employers contributions.

Bear in mind that if the pension is a defined contribution pension – there may be other factors to want to change but RRSP contribution room is not affected.

Then too – as my friend found out when he ran the numbers, being in a db pension can be much better in some situations. He was late into the db pension so when he assumed what he thought was a reasonable growth rate for his RRSP – his figures showed running out of RRSP money in 6.5 years, compared to the db pension that would run pay out to his spouse for 10 years, if he dropped dead the first month of retirement.


13 Krishna Jaisingh

Hi Mike,

My wife work for a company for 20 years and got let go because she hurt herself. She is on WSIB with payments of $1395 every two weeks. This went on for the last 2 years. About 2 mouths ago WSIB sent her a letter telling her that the money would be reduced to 768 every two weeks. this works out to $10.25 hr. Her total income for the year now will be around 18 000. When she was let go she had a pension plan that was put into a lock in RRSP worth around 42 000. would she be able to get some of this money out now that her income in under 32 000 and if yes how much do you think she could take. The WSIB payments are tax free will this really hurt her at tax time if she did get money out.

Thank you.

P.S. you have a great web site

14 Karin Treff

I read with interest the article on unlocking a LIRA. One question: I am 60 yrs old and would like to convert my LIRA to an LIF prior to unlocking 50% of the fund. Must I be retired already in order to do this?

15 Mike Holman

@Karin – No.

16 Ben Lau

Hi Mike,
I am 62 yrs old and currently have LIRA and RRSP.
Can I use my LIRA and RRSP as mortgage to purchase an income property?
My financial advisor at Meridian CU advised me that it would be difficult as the admin cost to manage my LIRA and RRSP mortgage would be very expensive.
Please advise if I can use it as mortgage to purchase an income property?
Thanks Ben Lau

17 Pearl

I have left Canada and understand I can apply to withdraw my Lira once i am a non resident of Canada after 24 months. I am experiencing financial difficulty and am unable to secure employment. I have withdrawn money from my LIRA under financial hardship in 2011 while still living in ontario and can apply again in march. do you know if i can still apply even though ive left the country?

18 M.West

On what line of the Tax Return is the offsetting RRSP Contribution Receipt entered after the 50% unlocking of the RIF.

19 tiina dagnall

what if my job is terminated? how much approx would my payout be after 21 yrs of service?

20 Jen

Mr. Holman,

If I leave Canada for two years to become a non-resident in order to unlock a LIRA then Revenue Canada will consider me to be an emigrant or a factual resident of Canada. If I am a factual resident of Canada then I am still a resident and cannot unlock my LIRA? Or do I have to become an emigrant in order to unlock my LIRA and lose my Canadian citizenship?

Thank-you in advance for the advice.


21 Bob M

If the T4 for the LIF will not be received until 2013 (for the 2012 tax year). But, the RRSP contribution slip has been received in the 1st 60 days of 2012. Can I use the RRSP deduction against other 2011 income, a higher income year and then deal with paying the tax on the T4-LIF next year? OR do they HAVE to offet each other as a direct transfer? Thanks for your help!

22 Scott

I’m a US citizen. I taught at an Ontario university for four years and have an RPP. I returned to the US in 2001, and I’m over 55. I currently have over $30,000 in my account and they’re charging me $400 a year to administer it. I’d rather have my funds in the US where I can combine it with my other retirement investments in my portfolio–can I bring my funds to the US, and how? If not, can I find a better Canadian fund to invest for my upcoming retirement days?

23 Dev P

Thanks for the great post. I appreciate this article as I have LIRA and i always wanted to know how you can unlock this account in simple words.

Can you help me with this – I am nearly 38 yrs old in ON and have LIRA. How can I get my money UNLOCKED? I have locked in account at ING with amount nearly 27k.
I just want to withdraw (if possible) as I have very long journey ahead.

Look at OAS at 67 now, by the time I will become eligible for retirement – govt will increase age by 72 or 75 or govt will not have money to pay or may be, bankrupt by baliout..and lose value by inflation…

I do not want to leave it to bank or govt (you see all bailouts for rich)?

More, from this article link – I have seen couple of changes in LIRA – which ING did not bother to inform me. These changes could have helped me, i think.

Dev P

24 Jan

I had a locked in rsp with great west life at the time of signing the recruiter forgot to mention it was a locked in rsp and can not be touched at all. When I left my employer who provided the rsp I switched it to the RBC bank again as locked in as after reading that you have 60 days to switch it to a regular RSP which the guy at the bank neglected to tell me too. I want to use this money to either pay bills or put as a down payment on a house. Aside from living from paycheque to paycheque I am not in financial hardship. Right now there is 13000.00 in the account which I would like to use now. Is there any way aside from dying early, or financial hardship that i can have this money released.

25 Dan

My wife has a LIRA as a result of a divorce settlement from her first husband who worked for the federal government. Is her LIRA considered Federal or would it be Provincial (Ontario, Quebec?).

26 terry

i have left the company i worked for since june 14 2012 and i have a lira account with them, i have asked them to tranfer the money to my bank account and they still havent done this as they keep finding excuses to not transfer my account my question is , how much longer should i wait or can i take legal action against them as i have lost 2000 dollars in investments if i wouild have had the funds in my account

27 Howie

I have an Ontario lira and am 57yrs and still working in BC.Apparently you can convert 50% to a rrsp and the other 50% to a lif withdraw the max allowable from lif and put into rsp if you have room. Annuitize?? some and claim the $2000 pension income credit.For easy figuring say there is $100k in the lira.What order do I do this in and how do you annuitize without actually buying an annuity from an insurance company. Thanx.

28 McDonyez

So i’m leaving my current employer who has a federally governed defined benefit pension plan and since I’m going back to school (and therefore can’t transfer this pension anywhere), it’s going to be stuffed into an untoucheable Locked In Retirement Account.

There are various ways to unlock these accounts but they all seem to require me to be over 55 (which will be awesome in 29 years) or be seriously po’ (“financial hardships” clauses).

I’d like to take this money out and put it into a regular RRSP that I can then withdraw from under the Lifelong Learning Plan and help me pay tuition.

Anyone have any ideas on unlocking this? This seems like a ridiculous issue given that it is the money that I put in there in the first place….

29 David Napper

Hello everyone. First of all, excellent article. Well written and easy to follow. I was curious if anyone can help with a bit a special case. A Friend of mine moved back to Europe a few years ago (more than 24 months). He will be 55 in May 2013. He currently has less than $19K in a locked in RSP in Ontario and is trying to get the money out based on either his age or his non-resident status. The Plan holder says he need to transfer the RSP to a LIF before being able to cash it out. Is this true or can he apply while it is still in the RSP. I’m just worried a bank will not open a LIF or other for a non-resident. Any assitance is great appreciated!

30 Brian

I have a Lira of Ontario Hydro Bonds I have been a non-resident for tax purposes since 1992 Can I withdraw my whole Lira anytime?

31 Ursula

I am in my forties
I was terminated from my employer and I have to transfer my RPP to a LIRA.
After it is transferred to the LIRA, can I transfer to a new LIF and withdraw up to 50% from the new LIF within 60 days (if I am under age 55)?

32 sue

i have a small LIRA that I was forced to open a number of years (1995) after my company closed down. This LIRA has not made me any money – it would have been better to have given us the money to put a downpayment on a house as that would have been a better investment. But I am now age 55 but not retired and was wondering if I can close my LIRA and take either the cash to invest where I want or transfer to an RRSP.

33 daniel

hi mike.i have a lira account worth about 3000o dollars,in the last few months i have lost my job as well as my wife and i am experiencing a lot of financial hardships,such as only being able to pay the interest on my moertgage,car payments,utilities etc etc,is there a way of getting my hands on some of this money to help my situation?i live in ontario

thank you

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