The main difference between a locked-in retirement account (LIRA) and a registered retirement savings plan (RRSP) is that:
The chart below shows the various ways a LIRA compares to a personal RRSP and a group RRSP.
LIRA |
Personal RRSP |
Group RRSP |
|
What’s it for? |
Retirement savings. |
Retirement savings. |
Retirement savings. |
Who sets up the plan? |
You. |
You. |
Your employer sets it up, but you’ll have to enrol in it. |
Who contributes to this plan? |
No one; the funds are transferred from your former employer’s pension plan. |
You. |
You and potentially your employer. |
Can I contribute at any time? |
You can’t make any cash contributions; transfers from other employer pension plans may be allowed. |
Yes, until Dec. 31 of the year you turn age 71. You’ll also need to have contribution room. See rules. |
Yes, until Dec. 31 of the year you turn age 71. You’ll also need to have contribution room. See rules. |
Can I make withdrawals at any time? |
No, funds are locked-in until you reach a specific age. See rules. |
Yes. |
Yes, but some restrictions may apply to employer contributions. |
Will I be taxed on my withdrawals? |
Yes. |
Yes. |
Yes. |
How long can I keep my account open? |
Until the end of the year you turn 71. |
Until the end of the year you turn 71. |
Until the end of the year you turn 71. |
Apart from retirement savings, you can also use an RRSP for income splitting, buying your first home, and full-time education or training.
A Sun Life advisor can answer your questions and help you set up a plan that fits your financial needs and goals.
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