Can a LIF be converted to a RLIF at any age over 55? | RRSPs and RRIFs | Discussion forum

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Can a LIF be converted to a RLIF at any age over 55?
November 20, 2024
5:30 pm
NCC1701Z
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To facilitate the 50% unlock

November 22, 2024
9:04 am
Norman1
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It's not really a conversion. It is a transfer from a federal LIF to a RLIF and can be done anytime.

However, that 50% unlock of the RLIF to an RRSP within 60 days, under Pension Benefits Standards Regulations, 1985 paragraph 20.3(1)(n), is only available starting the calendar year the RLIF holder turns 55:

20.3 (1) The contract or arrangement establishing a restricted life income fund shall

(n) provide that, if the restricted life income fund is established in the calendar year in which the holder of the fund reaches 55 years of age or in any subsequent calendar year, the holder of the fund may transfer 50% of the funds in that fund to a registered retirement savings plan or a registered retirement income fund within 60 days after the establishment of the restricted life income fund if

(i) the restricted life income fund was created as the result of the transfer of a pension benefit credit under section 16.4 or 26 of the Act or a transfer from a locked-in registered retirement savings plan, a life income fund or a PRPP, and

(ii) if the holder gives a copy of Form 2 of Schedule V to the financial institution with whom the contract or arrangement for the restricted life income fund was entered into; and

According to OSFI: Unlocking from restricted life income funds, the option is available once per RLIF and available multiple times if one transfers to multiple RLIF's:

5. Can funds be unlocked under the one-time 50% unlocking option from more than one account?

Yes. The fund holder can transfer funds from a number of accounts either into a single restricted life income fund (RLIF) or into a number of different RLIFs.

The one-time 50% unlocking option has to occur within 60 days of the establishment of the RLIF from which the funds are withdrawn. The RLIF is considered established on the date the funds are initially deposited into the RLIF. Holders with funds in more than one account may, therefore, wish to transfer funds into more than one RLIF if it is expected that some of the funds will not be transferred within 60 days of the establishment of the RLIF.

November 22, 2024
9:41 am
Norman1
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There's actually more than one federal pension act according to The Navigator: Locked-in retirement plans:

In some cases, federal legislation governs your pension. If you’re a member of a federal private pension, your pension funds are subject to the Canada Pension Benefits Standards Act (PBSA). Where you worked and earned your pension benefits would not matter. The PBSA applies to private pension plans for federally regulated businesses such as banking, telecommunications and transportation. It also applies to pension plans relating to employment in the Yukon, the Northwest Territories and Nunavut.

Some federal public service pension plans are subject to their own legislation. These include the Public Service Superannuation Act (PSSA), The Canadian Forces Superannuation Act (CFSA) and the Royal Canadian Mounted Police Superannuation Act (RCMPSA). If you’re a federal public service employee, ask your plan administrator which act governs your pension plan. Information in this article that discusses federal pensions assumes that the member’s pension is governed by the PBSA.

That 50% RLIF unlocking is for locked-in accounts governed under PBSA.

November 22, 2024
3:20 pm
NCC1701Z
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Thanks Norman for that comprehensive reply!

I looked on that Justice site but it was too overwhelming for me.

My LIRA came from a federally regulated business and I'm over 55

Once the RLIF is unlocked by 50% what is the result? A LIF and a RRIF/RRSP of 50% each or a RRIF/RRSP and a RLIF of 50% each?

November 22, 2024
6:04 pm
Norman1
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One would be transfering 50% out of the RLIF to an non-locked-in RRSP or RRIF. So, one would end up with 50% in the RLIF and 50% in the RRSP/RRIF.

This is the correct link for OSFI: Unlocking from restricted life income funds.

November 23, 2024
1:24 pm
savemoresaveoften
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if one has a LIRA but does not need to touch that money at all, is there any other benefit to still do this 50% conversion to a RLIF and then transfer to an non-locked-in RRSP ?

November 23, 2024
2:52 pm
NCC1701Z
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savemoresaveoften said
if one has a LIRA but does not need to touch that money at all, is there any other benefit to still do this 50% conversion to a RLIF and then transfer to an non-locked-in RRSP ?  

It provides more flexiblity in the future but could increase the risk of losing or spending your money too soon. ie: potential scamming since there is no limit to the withdrawals of the 50% unlocked portion.

November 23, 2024
5:38 pm
Norman1
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Also, not everyone is going need LIF or LRIF payments until age 90 because they aren't going to make it to age 90.

Some people can tell by looking at their own medical history and at their family history.

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