What are LIFs/LRIFs?

Life income funds (LIFs) and locked-in retirement income funds (LRIFs) are tax-sheltered accounts used to pay out the accumulated value of a locked-in RRSP, locked-in retirement account (LIRA) or locked-in amounts under a registered pension plan (RPP).

Unlike the money you contribute to your personal RRSP, this money must be used to fund a retirement income.

These accounts are designed to provide an income that will last for a lifetime. But there are some restrictions. In most cases you can’t cash out your LIF or LRIF. The government sets both a minimum and maximum for the payments you can receive each year from your LIF or LRIF. Within this range however, you can control your investment options and the amount of your payments.

There are two major differences between the LIF and LRIF:

  • In some provinces, remaining funds in a LIF must be converted to a life annuity by the end of the calendar year in which you turn 80. However, the LRIF doesn’t have to be converted to a life annuity.
  • The calculation of the maximum amounts is different between the LIF and the LRIF.

In Manitoba and Saskatchewan, the prescribed retirement income fund (PRIF) serves as an alternative retirement option for locked-in amounts from the registered plans mentioned above. It’s designed to share the same flexibility as the LIF, with the added benefits of not having an annual maximum withdrawal limit, or cash out restriction.