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What is a life income fund?
The Life Income Fund can be used to convert the savings you’ve accumulated in the following products into retirement income:
- Locked-in retirement account (LIRA)
- Locked-in RRSP
- Pension plan (RPP, SPP, PRPP, VRSP)
It allows you to make regular withdrawals from your accumulated savings to meet your financial needs once you retire.
The LIF is similar to the registered retirement income fund ((RRIF), but with a few key differences:
- The accumulated money comes from a different source (your savings)
- There is an annual withdrawal maximum
Main advantages of an LIF
- Your savings grow tax free until you withdraw them
- You receive regular income in retirement
- Withdrawal amounts can be adjusted according to your needs, as long as you stay within the minimum and maximum limit
- Accumulated funds can be withdrawn periodically for as long as they last.
Don’t forget
Conversion
A LIRA or pension plan must be converted to a life income fund when you retire and want to start receiving income from your locked-in retirement savings.
Specific rules on conversion age and conditions may vary depending on your province of residence. For more information on the conversion age for your province, talk to an advisor.
Withdrawals
Like the RRIF, the LIF has a mandatory minimum annual withdrawal. Unlike the RRIF, however, it also has a maximum withdrawal limit.
These amounts vary each year depending on your age and the balance in the LIF. The maximum withdrawal amount is also determined by a reference rate set every year.
Income taxes
LIF withdrawals are taxable. The amounts you withdraw must be declared as income for the year in which they are withdrawn.
Why opt for an RRIF with iA Financial Group?
We offer savings products that include advantageous guarantees for retirement. You can invest in our segregated funds, which provide access to many benefits, such as capital protection at maturity and at death.
You can also invest in our guaranteed interest funds and our high-interest savings account. These investment options offer competitive returns and can help balance your portfolio for retirement.
Planning to open your LIF?
I have an advisor
If you already have an advisor, contact them today to start preparations to open a life income fund. To find their contact information, go to My Client Space, check one of your statements or contact Customer Service at 1-844-442-4636.
Sign in to My Client SpaceI don’t have an advisor
You will need an advisor’s help to open a life income fund. You can contact an advisor of your choosing at your earliest convenience.
FAQ
What is the difference between an RRIF and an LIF?
The main difference between a registered retirement income fund and a life income fund is the source of the funds. In most cases, an RRIF is created by converting an RRSP, while an LIF is usually created by converting a LIRA, locked-in RRSP or pension plan. Also, unlike RRIFs, LIFs have a maximum annual withdrawal limit.
Can you choose the frequency of payments from an LIF?
Yes, you can withdraw funds at different frequencies. Check with your advisor to discuss your options and make sure that your withdrawal strategy meets your income and tax needs.
Are withdrawals from an LIF taxable?
Yes, the money you withdraw must be added to your annual income and taxed according to your marginal tax rate.
What happens to my LIF when I die?
Based on the source of the funds in your life income fund and the rules in place in your province of residence, iA Financial Group LIFs may offer the option of designating one or more beneficiaries. When applicable, this means the regular inheritance process can be bypassed, ensuring a quick settlement on death.
What happens if I don’t convert my LIRA (or other products) into an LIF?
If you have accumulated funds in a LIRA, when you reach 71 years old, you must transfer them into a life income fund and withdraw an income, except under certain specific conditions. Please contact your advisor for more information.