LIRA (Locked-In Retirement Account)

What Is a LIRA?

A Locked-In Retirement Account (LIRA) is a special type of registered account used to hold pension funds when you leave a job with a defined benefit or defined contribution pension plan. It’s called “locked-in” because you generally can’t access the money until retirement, and even then, withdrawals are limited.

LIRAs are designed to preserve pension savings for retirement, not for short-term use.

When Is a LIRA Used?

You’ll typically transfer funds into a LIRA if:

• You leave an employer with a registered pension plan
• You opt out of a pension due to a split or change in employment
• You receive pension assets as part of a marriage or common-law separation

LIRAs are not available for new contributions—they only hold pension transfers.

Key Features of a Locked-In Retirement Account

• Funds are locked in and can’t be accessed freely before retirement age (usually age 55 or later).
• You can’t make new contributions—it’s a transfer-only account.
• You choose how to invest the funds (GICs, stocks, mutual funds, etc.).
• The account grows tax-deferred, like an RRSP.

Converting a LIRA

You must eventually convert your LIRA into a retirement income account, such as:

• LIF (Life Income Fund)
• LRIF (Locked-In Retirement Income Fund)
• Annuity
  

This typically happens by the end of the year you turn 71—or earlier, if you want to start withdrawals (as allowed by your province’s rules).

Early Access For LIRAs: Are There Exceptions?

Yes, but they’re limited and depend on provincial or federal pension laws. Some common exceptions include:

• Small balance (under a certain threshold)
• Financial hardship
• Reduced life expectancy
• Non-residency in Canada

Rules vary by province—Ontario, Alberta, and others each have their own LIRA legislation.

Key Takeaways

• A LIRA holds pension savings after leaving a job and keeps them locked in until retirement.
• You can’t contribute new money, and early withdrawals are highly restricted.
• Funds can be invested and grow tax-deferred until converted into retirement income.

Each province sets its own rules, so always check your regional regulations.