LIRA vs RRSP: What’s the difference?

The main difference between a locked-in retirement account (LIRA) and a registered retirement savings plan (RRSP) is that: 

  • a LIRA holds locked-in pension money that you and your previous employers contributed to, whereas 
  • a personal RRSP holds funds that you’ve contributed on your own, and 
  • a group RRSP holds funds that you (and potentially your employer) contributed to. 

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.

Additional resources

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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