Page 101 - A Canuck's Guide to Financial Literacy 2020

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you may unlock your funds pending that Quebec
you’ve received a confirmation letter from the CRA. Manitoba
Saskatchewan
Nova Scotia

Be mindful that in order to unlock the account, applicable forms and spousal consent may
have to be provided.

Tax on Withdrawals

Keep in mind that income from LIRA withdrawals is taxable and added to your annual
income. Withholding tax would apply.

Withdrawal Amount Up to Between $5,000 and up to Over
$5,000 $15,000 $15,000
Tax Rate withheld for Canadian 10% 20% 30%
residents
Tax Rate withheld for the province of 5% 10% 15%
Quebec

Mandatory Conversion at 71

Keep in mind that by the end of the year you turn 71, the LIRA has to convert to either a Life
Income Fund, Locked-In Retirement Fund, Prescribed Registered Retirement Income Fund
or a life annuity.

Tax Issues at Death

One of the most important things you could do is naming a qualifying beneficiary on your
LIRA. A qualifying beneficiary would be

▪ spouse/common law partner

▪ financially dependent child
▪ financially dependent child with mental or physical disability

By naming a qualifying beneficiary, upon your death, the funds in the plan can be
transferred into a locked-in plan, a registered plan or may be used to purchase an annuity
on a tax deferred basis.

If the beneficiary is listed as estate or a non-qualifying beneficiary, then the funds
accumulated in the locked-in plan would be taxable on your final return.