Locked-in Retirement Account
A LIRA is a registered investment containing funds which originate from a pension plan of an eligible jurisdiction. It is regulated by the Income Tax Act and governed by federal or provincial pension benefits legislation. The interest accumulates tax free until funds are paid out. The plan holder retains flexibility to decide when he/she would like to convert the LIRA to a retirement income option such as a LIF or a LRIF, as early as the age of 55 years old.
Legislation Federally and in most provinces allow those age 55 and over, a one-time 50% unlocking of a LIRA into an RRSP or an RRIF when the LIRA is converted to a LIF.
Life Income Fund
A Life Income Fund is a Locked-in Retirement Income Option investment plan that allows you to convert Locked-in RRSPs or LIRAs (Locked-in Retirement Account) to income. This plan is regulated by the Income Tax Act and governed by provincial or federal pension benefits legislation. The interest on a LIF accumulates tax free until funds are paid out. A minimum amount must be withdrawn each year. However, unlike a RRIF, you can only withdraw up to a certain limit to ensure that by the age of 80, the minimum amount necessary will be available to purchase a life annuity.