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Unlocking, Withdrawals and Transfers from New Life Income Funds (LIFs)

This page provides frequently asked questions that relate to the unlocking, withdrawal and transfer from new LIFs.

 

Q1. How does the unlocking, withdrawal and transfer from the New LIF work?

 

A1. The owner of a New LIF has a time-limited option to withdraw in cash or transfer to an RRSP or RRIF a percentage of any money that is transferred into the New LIF. (This option will be referred to below as a “withdrawal or transfer”.  See the next question for the percentage that may be withdrawn).  The money that is transferred to the New LIF may be from an Old LIF, LRIF, LIRA, or a Registered Pension Plan (RPP).  Fund transfers from another New LIF are not entitled to the unlocking, withdrawal or transfer option, unless the funds are transferred from the other New LIF due to a relationship breakdown between two spouses.

 

If money was transferred from an Old LIF or LRIF before January 1, 2011, the New LIF owner can withdraw or transfer an amount up to the prescribed percentage.  However, no money can be withdrawn or transferred from the New LIF in relation to transfers from an Old LIF or LRIF that are made after December 31, 2010.

For transfers from a LIRA or RPP, the owner can withdraw or transfer an amount up to the prescribed percentage after every transfer.

 

However, if assets are transferred from one New LIF to another New LIF, or from an annuity to a New LIF, no money can be withdrawn or transferred from the New LIF that receives the money. - 05/10

 

 

Q2. If money was transferred into my New LIF, what percentage of the money may be withdrawn or transferred?

 

A2. Before January 1, 2010, the amount that could have been withdrawn or transferred was 25 per cent of the “total market value of the assets” that were transferred into the New LIF.  Effective January 1, 2010, this limit was changed to 50 per cent of the “total market value of the assets” that were transferred into the New LIF.

 

Note: the questions and answers below use the 50 per cent limit unless noted otherwise. - 05/10

 

 

Q3. How is the "total market value of the assets" for the 50 per cent withdrawal or transfer determined?  

 

A3. The “total market value of the assets” transferred into the New LIF is determined on the date the money was transferred into the New LIF.  That date should be available from your financial institution.  Any increase or decrease in the value of the New LIF after the transfer is not taken into account.

 

Example: You transferred a sum of money into your New LIF on January 9, 2010 and then applied to withdraw 50 per cent of the funds on February 1, 2010.  In this example, the 50 per cent is based on the amount that was transferred into your New LIF on January 9, 2010. - 05/10

 

 

Q4. Is there an age restriction on who can apply for a withdrawal or transfer from the New LIF?

 

A4. No. However, a person’s age does play a role in determining the earliest date on which that person could purchase a New LIF. An individual may purchase a New LIF at any time during the calendar year that precedes the year in which he/she would have been entitled to start receiving pension payments from the pension plan from which the money used to purchase the New LIF originated.

 

Example: if your pension plan starts providing pension payments at age 55, you could purchase a New LIF at any time during the year that you turn 54. - 05/10

 

 

Q5. Can a person who owns a New LIF and is under 55 years of age apply for a withdrawal or transfer to an RRSP of up to 50 per cent of the money (i.e., the total market value of the assets) transferred into the New LIF?  
 
A5. Yes, as long as he or she makes the application within 60 days from the date the money was transferred into the New LIF from a registered pension plan or LIRA (or from the LIF or LRIF of a spouse or former spouse if the money was transferred under the terms of a Family Law Act order, family arbitration award or a domestic contract). However, there is an age-related restriction relating to the earliest date that an individual can purchase a New LIF. (For more information on this age restriction, please refer to the section on age restriction in FSCO's Policy on New LIFs). -02/13
 

Q6. What is the deadline for applying for a 50 per cent withdrawal or transfer from a New LIF? How and where do I apply?

 

A6. You must apply to the financial institution that administers the New LIF into which the money was transferred, within 60 days from the date the money was transferred. The application must be made using FSCO pension Form 5.2, but it must be submitted to your financial institution (not to FSCO).  - 05/10

 

 

Q7. What happens if I do not submit the 50 per cent withdrawal or transfer application within the required 60 days? Do I get another opportunity to submit the application?

 

A7. No.  If you do not submit an application to withdraw or transfer 50 per cent of your money in a New LIF within the required 60 days, you will not have another opportunity to take advantage of this provision in relation to that transfer.  - 05/10 

 

 

Q8. What is the time limit for a 50 per cent withdrawal or transfer application?

 

A8. Every time money is transferred into a New LIF from a pension plan, LIRA, Old LIF or LRIF (but not from an annuity or another New LIF), you have 60 days to apply for a withdrawal or transfer of up to 50 per cent of the amount that was transferred into the New LIF. The 60 days begins on the date the money is transferred into the New LIF, not the date the New LIF was opened.  If you are not sure about this date, please check with your financial institution.  Your financial institution is required to make the payment or transfer to you within 30 days of receiving your completed application form and accompanying documents.  - 05/10 

 

 

Q9. Is the 50 per cent withdrawal or transfer from the New LIF in addition to the maximum amount that I can receive as income for the year?

 

A9. Yes. The 50 per cent withdrawal or transfer amount is in addition to the maximum amount that can be paid from the New LIF as income. The annual maximum and minimum income payment from a New LIF always relates to the balance of the New LIF at the beginning of its fiscal year.  - 05/10 

 

 

Q10. Does the 50 per cent withdrawal or transfer require any changes to the provisions of pension plans?

 

A10. No, the 50 per cent withdrawal or transfer under the New LIF does not require any pension plan changes. To apply for the 50 per cent withdrawal or transfer, you are required to submit an application to the financial institution that holds the New LIF — not the pension plan from which the money originated.  - 05/10 

 

 

Q11. Can the 50 per cent withdrawal or transfer be made from the existing locked-in account (e.g., LIRA, Old LIF, LRIF) prior to the transfer to the New LIF?

 

A11. No. The 50 per cent withdrawal or transfer must come from the New LIF after the money has been transferred into it.  - 05/10 

 

 

Q12. If an individual has already purchased a life annuity with locked-in money, is it possible to switch back to a New LIF to take advantage of the 50 per cent withdrawal or transfer?

 

A12. It may be possible to convert the unexpired part of a guaranteed life annuity and purchase a New LIF with the proceeds.  However, the 50 per cent withdrawal or transfer option would not apply to the transferred money, as it only applies to money that is transferred into a New LIF directly from a pension plan, LIRA, Old LIF or LRIF — not to money that is transferred from an annuity or another New LIF.  - 05/10 

 

 

Q13. I own a New LIF with Company A. If I transfer all the money from the New LIF to another New LIF with Company B, can I apply to withdraw or transfer up to 50 per cent of the amount that was transferred into the New LIF with Company B?

 

A13. No. You cannot apply for a 50 per cent withdrawal or transfer for money that is transferred from one New LIF to another New LIF, unless the transfer was made under the terms of an order under the Family Law Act, a family arbitration award, or a domestic contract as defined in Part IV of that Act.  - 05/10 

 

 

Q14. I transferred $100,000 from a LIRA into a New LIF on January 2, 2010.  By the time I applied for the 50 per cent withdrawal or transfer, the value of the New LIF decreased to $90,000. Which amount do I use to determine the withdrawal or transfer?

 

A14. The market value of the LIRA on the date that you transferred the money into the New LIF determines the amount that can be withdrawn or transferred. In this case, you can withdraw or transfer 50 per cent of $100,000, which equals $50,000.  - 05/10   

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FAQs on Rules for Ontario Locked-In Accounts