LIF
Life Income Fund
What is an LIF?
A Life Income Fund (LIF) is a type of retirement income fund that is used to convert locked-in retirement savings, such as funds from a Locked-In Retirement Account (LIRA) or a pension plan, into a stream of retirement income.
Why open an LIF?
Estate Planning
Upon the account holder’s death, the remaining balance in the LIF can be transferred to a beneficiary, such as spouse.
Income Stream
LIFs provide a steady stream of income throughout retirement. This ensures a consistent cash flow and financial stability.
Tax Advantages
Like RRIFs, LIFs offer tax-deferred growth on investments. Taxes only apply upon withdrawal.
How does LIF work?
If you have a pension plan or savings within an LIRA, you can convert them into a LIF upon retirement. This allows you to withdraw from locked-in funds and provide a consistent income stream. You cannot contribute to an LIF and you must convert your LIRA into a LIF in the year you turn 71.
There is also a minimum restriction on withdrawal amount. However, unlike RRIFs, there is a maximum limit as well. Withdrawals are still taxed, but as such LIFs act as a tax-defferal option.
Additionally, LIFs offer estate planning advantages, meaning in the event of death, assets within the LIF can be passed to a designated beneficiary.
Who can open one?
You can open an LIF entering early retirement, but you must convert your LIRA or pension plan into an LIF at age 71.
In some provinces, by age 80, you must convert LIF to life annuity.
Tax Treatment
Tax-Free?
Tax-Deductible?
Tax-Deferred?
Numbers to Know
There are other accounts that you can open with similar functionalities dealing with locked-in assets. Contact us to navigate these nuances and see what would work best for you!
Ready to Invest? We can help!
Call Us
Give us a phone call and we can explain everything with you over the phone.
Join Our Seminar
Stay informed with our seminar updates.
Subscribe our Newsletter
Stay informed with market insight, wealth management strategies and our seminar updates.