Guide
LIRA & LIF: locked-in retirement accounts
Reviewed by The Retirement Beast editorial team · figures verified against CRA / Service Canada · Updated
If you left a job with a pension, your money may have followed you into a locked-in account. LIRAs and LIFs behave like RRSPs and RRIFs with one big difference — the money is fenced in for retirement, and the rules depend on your jurisdiction.
Model RRIF/LIF minimumsQuick answer
A LIRA is the locked-in cousin of an RRSP, and a LIF is the locked-in cousin of a RRIF. The key difference from a RRIF is that a LIF has both a minimum and a maximum annual withdrawal, and the exact limits and unlocking rules depend on whether your pension is federally or provincially regulated.
On this page
- Where locked-in money comes from
- LIRA (accumulation) vs LIF (payout)
- The minimum and maximum withdrawal
- Unlocking rules
- Why jurisdiction matters
- FAQs
Where locked-in money comes from
When you leave an employer with a registered pension plan, you often have the option to transfer the commuted value out of the plan. Because that money was intended to provide lifetime retirement income, it does not go into a regular RRSP — it goes into a locked-in account (a LIRA, or a jurisdiction-specific equivalent), where withdrawal is restricted.
LIRA vs LIF
- LIRA — the accumulation phase. Invests and grows tax-deferred like an RRSP, but you cannot contribute to it and cannot generally withdraw lump sums.
- LIF — the income phase. Like a RRIF, you convert the LIRA to a LIF (typically by the end of the year you turn 71) and begin withdrawing income.
The minimum and maximum withdrawal
A LIF uses the same minimum withdrawal factors as a RRIF (about 5.28% at 71, rising with age — see the RRIF guide). Unlike a RRIF, it also imposes a maximum withdrawal each year, so you cannot drain it quickly. The maximum is set by a formula that depends on your age and the jurisdiction's rules, which is why two people with identical LIFs in different provinces can have different withdrawal ceilings.
Unlocking rules
Locked-in does not always mean permanently locked. Depending on your jurisdiction you may be able to unlock a portion (commonly up to 50%) when you start a LIF, and there are special provisions for small balances, non-residency, shortened life expectancy, and financial hardship. These rules are among the most jurisdiction-specific in Canadian retirement, so confirm yours before assuming.
Why jurisdiction matters
A pension is regulated either federally (banks, telecoms, interprovincial employers) or by the province where you worked, and each regime sets its own LIF maximums and unlocking rules. Your financial institution and pension administrator can tell you which applies. Everything else — tax treatment, eligibility for pension income splitting at 65, and the interaction with the OAS clawback — mirrors RRIF income.
Frequently asked questions
What is a LIRA?
A Locked-In Retirement Account holds pension money you transferred out of a former employer's plan. It works like an RRSP — investments grow tax-deferred — but the funds are 'locked in' for retirement, so you generally cannot make lump-sum withdrawals.
What is a LIF?
A Life Income Fund is the payout version of a LIRA, similar to a RRIF. It has a mandatory minimum withdrawal each year like a RRIF, but also a maximum withdrawal set by pension rules — and those limits vary by jurisdiction.
What is the difference between a LIF and a RRIF?
A RRIF only has a minimum withdrawal; a LIF has both a minimum and a maximum. The maximum exists because LIF money came from a pension and is meant to provide income across your whole retirement, not be withdrawn all at once.
Can I unlock a LIRA or LIF?
Sometimes. Many jurisdictions allow a one-time partial unlocking (often up to 50%) when you convert a LIRA to a LIF, and there are special-access rules for small balances, shortened life expectancy, or financial hardship. The rules depend on whether your pension is federally or provincially regulated.