What Happens to My Locked-in Retirement Account (LIRA) When I Die?

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The Canadian locked-in retirement account (LIRA) is an unusual and very specific type of retirement account, whose rules are crystal clear.

• If you have a LIRA and you die prior to reaching retirement age, the balance in your account would be transferred to your spouse or common-law partner.
• If you and your spouse or partner were living separately because of a breakdown in your relationship prior to your death, then that spouse or partner would not be eligible to receive the death benefit.
• If you do not have a spouse or common-law partner, the balance in your LIRA would go to either a designated beneficiary or, if there is no beneficiary, then to your estate.  

If you and your partner or spouse had a breakup and were living apart prior to your death, then they could not receive the balance in your LIRA account.  

Understanding a Locked-in Retirement Account (LIRA)

In Canada, a locked-in retirement account (LIRA) is a registered retirement savings plan (RRSP). You may elect to open a LIRA at any age to hold funds. Such funds include those transferred from a registered pension plan (RPP) acquired when you terminate your membership by leaving the employer that initiated that plan.

The locked-in retirement account is designed expressly to hold pension funds for either a former plan member, a former spouse or common-law partner, or a surviving spouse or partner. The LIRA is called "locked-in" because, unlike the Canadian RRSP, which you may cash in whenever you decide, a LIRA does not provide such an option. It's about holding your money for you or someone you designate until you either retire or die.

Key Takeaways

• In Canada, the locked-in retirement account is designed expressly to hold pension funds for a former pension plan member or their beneficiaries.
• LIRA death-benefit rules are basically the same throughout the country.
• In general, you may not transfer a LIRA from the province in which it was registered.
• Death benefits are not locked-in and can be paid out as cash, or the balance may be transferred to another of the owner's retirement funds.  

In Death, Your LIRA Is No Longer "Locked"

Death benefits are not locked-in and can be paid out as cash, or the balance may be transferred to the recipient’s own RRSP or registered retirement income fund (RRIF). In the event that the LIRA balance resulted from the pension benefit of someone other than the owner, then the death benefit does not apply.  

The rules regarding LIRA death benefits vary minimally across Canada’s provinces and, in general, a LIRA cannot be transferred from the province in which it was registered.

If Your Beneficiary Doesn't Want to Participate

Your spouse, partner, or beneficiary may waive any rights to the death benefit either before or after your death. To do so, the person must first receive all prescribed information from the LIRA plan administrator. They must then sign a waiver and give it to the administrator.  

If your spouse, partner, or beneficiary waives the right to the death benefit, the balance of the LIRA will go to your estate instead. As the owner of the LIRA, you and your spouse can revoke the death benefit waiver by signing a joint letter and filing it with the bank or financial institution that holds the LIRA.  

1. Government of Canada. "Pension Benefits Standards Regulations, 1985."
2. Manitoba. "Death Benefits."
3. Government of Canada. "Unlocking Funds From a Pension Plan or From a Locked-in Retirement Savings Plan."
4. Government of Canada. "Registered Retirement Savings Plan (RRSP)."

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