Converting Your RRSP
Life Income Funds (LIFs) & Locked-In Retirement Income Funds (LRIFs)
Converting Your LIRA, Locked-In RRSP
Capital from Your Pension Fund
Provincial or Federal Jurisdiction?
Authorized Withdrawals
Eligible Investments
Converting Your LIRA/Locked-in RRSP
Under the law, you may keep your LIRA (Quebec and Ontario provincial jurisdiction) or your Locked-in RRSP (federal jurisdiction) until the end of the year in which you turn 71. You must convert it retirement income before December 31st of that year. You have several retirement income options: A Life Income Fund (LIF), a Locked-in Retirement Income Funds (LRIF) or a life annuity or a combination of these two.
The capital in your LIRA or Locked-in RRSP may be converted, in full or in part, to a LIF/LRIF, where it will continue to grow tax-free. Only your withdrawals will be taxable.
Capital Directly From Your Pension Fund
Generally, the money you have accumulated in a supplemental pension plan set up by your employer (also known as a "pension fund") may be transferred directly into a LIF/LRIF if you leave your job or retire before age 55.
Provincial or Federal Jurisdiction?
Funds are transferred into a LIF/LRIF from (directly or after going through a LIRA (Quebec and Ontario provincial jurisdiction) or a Locked-in RRSP [federal jurisdiction]) your supplemental retirement plan.
If this pension fund was set up by a company under provincial jurisdiction (Quebec or Ontario), your LIF/LRIF is subject to the applicable provincial legislation.
If your company was under federal jurisdiction (such as rail and air transport, radio and television, banks), federal legislation applies.
Thus, each jurisdiction (Quebec, Ontario or federal) has a LIF with separate rules for maximum withdrawals. The LRIF is available in Ontario and has a maximum annual withdrawal calculations different from those of the LIF.
Authorized Withdrawals
The law dictates the minimum and maximum amounts you may withdraw each year. The maximum withdrawal calculations depend on whether your LIF or LRIF falls under provincial (Quebec or Ontario) or federal jurisdiction. If your plan is under provincial jurisdiction, your caisse offers you the option of temporary income or between the ages of 54 and 64. For more information, contact your Desjardins advisor.
The LIF/LRIF is very flexible: you maintain total control of your capital. You select the amount of the payments you will receive and you can change it at any time (subject to the legislated annual maximum). You can also make additional withdrawals, which lets you carry out your retirement plans and vacations, help your children financially or plan for contingency purposes.
Only the LIF/LRIF gives you total control over your capital.
Conversion
Of these four products (LRIF and LIF of three jurisdictions), only the Ontario LIF must be converted to a life annuity before the end of the year in which the annuitant turns 80.
Death
Upon the annuitant's death, the balance of the LIF/LRIF has to be left to the surviving spouse. If there is none, the balance is transferred to the estate. The same applies to the Quebec LIF if the surviving spouse waives his or her rights to LIF bequest.
The federal LIF can only be transferred by the surviving spouse to a federal LIF or a Locked-in RRSP. The other three products (Quebec LIF, Ontario LIF and LRIF) may be converted into a RRIF or RRSP in the surviving spouse's name.
Eligible Investments
Several investments are LIF/LRIF-eligible. Select the investments that best suit your profile. However, you must make sure that your LIF/LRIF portfolio includes at least one investment, which will allow you to make regular withdrawals and, if required, additional withdrawals.
LIF/LRIF Savings Products
Ideal for the part of your portfolio where you wish to protect the capital. Several options are available:
Desjardins Personalized Annuity LIF
- term savings: interest rate guaranteed until term
- term may vary from 1 to 5 years
- you may select the type of periodic withdrawal (minimum, fixed, indexed)
- select the withdrawal frequency (monthly, quarterly, semi-annually or annually)
- you may hold more than one Personalized Annuity RRIF, diversifying your investments
Conventional LIF/LRIF
- combination of two accounts: regular and term savings
- regular savings gives you an interest rate that fluctuates with the market rate; your withdrawals are made from this account; it meets the short-term aspect of your portfolio
- Term savings gives you a higher interest rate, guaranteed for the length of the one-to-five-year term you choose; diversifying your term deposits allows you, on an annual basis, to transfer the amounts you need for regular payouts and withdrawals into a regular savings account
Desjardins Stock-Indexed Term Savings LIF/LRIF
- capital 100% guaranteed
- returns based on stock market performance or on the returns of a combination of currencies and indexed bond and market issues
- terms vary with current issues
Desjardins Permanent Shares LIF
Permanent shares are capital shares that are exclusive to Desjardins caisses in Quebec, which offer a higher return potential than one-year term deposits. If you wish, the interest payable may be automatically reinvested in the form of additional shares. Select permanent shares for protected capital, flexibility and a good return.
Desjardins Funds LIF/LRIF
Desjardins Funds include a range of international funds that are 100% RRIF-eligible and that do not entail any transactions fees (no load, transfer or acquisition fees)! Obtain the expertise of seasoned professionals as well as easy access to all financial markets.
Disnat Self-Directed LIF/LRIF
You may include almost anything: Savings instruments, treasury bills, bonds, mutual funds, Canadian or American stocks (see a complete list of eligible investments).
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