Financial Hardship Reasons for Unlocking Locked In RRSP
Withdrawal of Pension Funds | Canada
Locked-In RRSP Retirement Funds Can Be Unlocked and Withdrawn for Financial Hardship Reasons in Some Provinces
If you’re thinking of withdrawing money from your locked-in RRSP or pension funds to help you during a financial hardship, it would be best to speak with a Credit Counsellor first. Other options may be available to you so that you won’t need to use these funds. If, however, you’d like to look into the reasons that allow you unlock and withdraw money from your Locked-in Retirement Account (LIRA), Life Income Fund (LIF), or Locked-in Retirement Income Fund (LRIF), we’ve got all the financial hardship reasons listed below.
Before we get to that, though, we should mention one important detail. To unlock pension funds, they must first be transferred out of an employer’s Registered Pension Plan (RPP) and into a LIRA or LIF in your name, and you typically must also be no longer employed by the company who created the pension.
Below are reasons that permit you to unlock locked-in pension funds. Every locked in pension is locked and preserved for your retirement under the legislation of either a specific province or under federal legislation. You’ll have to check your pension documentation to see which provincial legislation it is locked in under (the financial institution that holds the funds will also have this documentation if you can’t find yours). Beside each reason below are the provinces (or federal legislation) that permit you to withdraw funds for that reason.
| Reasons to Unlock Locked-In Pension | Provinces That Allows for the Reason |
| Low Income - You expect your income to drop to a very low level | Ontario, BC, Alberta, Saskatchewan, Nova Scotia, Newfoundland, Federal |
| Potential Foreclosure | Ontario, BC, Alberta, Nova Scotia |
| Eviction for Being Behind on Rent or Mortgage Payments | Ontario, BC, Alberta, Saskatchewan, Nova Scotia, Newfoundland |
| First Month’s Rent and Security Deposit | Ontario, BC, Alberta, Saskatchewan, Newfoundland |
| High Medical or Disability Related Costs - You need money for medical expenses that are not covered by a medical plan or any other source, or you need to pay for renovations to your home that are required due to illness or disability. | Ontario, BC, Alberta, Saskatchewan, Nova Scotia, Newfoundland, Federal |
| No Longer a Canadian Resident | Ontario, Quebec, BC, Alberta, Manitoba, Saskatchewan, New Brunswick, Nova Scotia, Newfoundland, Federal |
| Shortened Life Expectancy | Ontario, Quebec, BC, Alberta, Manitoba, Saskatchewan, Nova Scotia, New Brunswick, Newfoundland, Federal |
| 50% Unlocking - Can do this one time if you are 55 years old or older | Alberta, Manitoba, Federal |
| Small Balance Unlocking - If the balance of your locked-in funds are below a certain amount, you can unlock and withdraw the money | Ontario (you must be at least 55 and the balance less than $25,960), BC (balance must not exceed $12,980), Alberta (balance must not exceed $12,980 if you're under 65), Manitoba (balance cannot exceed $25,960 after a future value calculation is done), Saskatchewan (balance must not exceed $12,980), New Brunswick (withdrawal formula is based on your age), Newfoundland, Federal (balance must be less than $12,980) |
| Age 65 & Balance is Small | Quebec (balance can’t exceed $25,960), BC (balance can’t exceed $25,960), Alberta (balance can’t exceed $25,960), Nova Scotia (amounts under $32,450) |
Note: All numbers listed in the table above are for 2022 (they go up a little every year)
The financial institution holding the locked-in retirement funds must review your situation to ensure it meets the requirements of the provincial legislation that govern their locked-in funds. The government is not involved in the decision to unlock your funds. All they have done is create the legislation for your province, and then it’s up to your financial institution to follow the legislation.
You don’t have to provide information about your other assets to qualify. All you need to fill out are the specific documents that apply to the reason why you are applying to withdraw your locked-in funds. There is often no charge for applying. However, provincial legislation does not prevent your financial institution from charging you a fee.
How to Find the Best Help & Assistance
For all situations involving financial hardship – especially withdrawing locked-in funds – the ideal person to talk to first is a non-profit Credit Counsellor. They often find that many people make a difficult situation worse for themselves by taking actions that seem right at the time, but in the end only end up leaving them in a worse financial position. Experienced, well trained Credit Counsellors are true financial hardship experts. They can guide you through all your options and help you figure out what steps would be in your best interest and which would not. The nice thing is that an appointment with a non-profit Credit Counsellor is usually free, and they’re able to provide you with an objective perspective and very helpful information. To find a good non-profit credit counselling organization near you, click here.
Links to Provincial Rules for Unlocking Funds Due to Financial Hardship
Ontario Rules for Financial Hardship Unlocking
Ontario Rules for Unlocking Funds when there is No Hardship
British Columbia Rules for Unlocking a Pension
Alberta Rules for Unlocking Funds Due to Financial Hardship
Manitoba Rules for Unlocking a Pension
Saskatchewan Rules for Unlocking a Pension
Quebec Rules for Unlocking a Pension
Nova Scotia Rules for Unlocking Funds Due to Financial Hardship
Nova Scotia – More Information About Unlocking Funds
New Brunswick Information About Unlocking Funds
Newfoundland – Eligibility for Unlocking Locked-In Retirement Savings for Financial Hardship
Prince Edward Island – Does not have its own laws and regulations governing pension plans
Federal Unlocking Options & Information for Financial Hardship
new brunsick pension unlocking
over half the provinces have a had cap for financialy hardship 10676 or rite around that B.C. SASKATCHAWAN, ALBERTA,MANATOBA,ONTARIO, NOVA SCOTIA AND THE REST HAVE WAYS TO UNLOCK SMALL AMOUNTS IF ITS DESPERATE, LIVING ON STREET NO FOOD SICK BUT NOT N.B YOU HAVE TO GET A DOCTOR TO WRITE WORD FOR WORD WHAT THEY SAY FOR THEM TOO THAT U HAVE VERY LITTLE TIME TO LIVE AND YOUR LIFE EXPECTANCY IS REALLY SHORT…..COME ON STOP SENDING HUNDREDS OF MILLIONS TO OTHER COUNTRIES AND LETS SPEND OUR TAX DOLLARS HERE HELPING ————————- CANADIANS—————————
unlocking pesion funds due to low income hardship
I am presently recovering from a life threatening situation, requiring surgical intervetion and lengthy recovery process. I’m required to see my physican and nursing staff for wound care regularly still. Currently, I am unable to work and have no other sources of income.
New Brunswick’s “rules”
It absolutely infuriates me that as a New Brunswicker we are behind every single province in Canada. When I say we are behind, I mean EVERYTHING! Employment, training, education, income, taxes (the only thing that is higher), and skilled hourly wages/salary. As of right now February 22/2020 we are the poorest province in this country, and as such this list of problems I just stated will only get worse. Seriously thinking about a move, probably to Nova Scotia…… At least they will let me draw some of my pension without having to practically die first.
Lira
I am on medical disability and my wife got some funding and receiving a small amount of money each week paid through the EI for going to college, she is 55 and has a small lira account which we could use because of financial hardship. Would she still be eligible for the EI weekly benefit if she unlocked the lira due to financial hardship.
Very good question
That’s a really good question and one you are wise to investigate before technically increasing your income by redeeming the LIRA. If you have a contact person at EI, this would be a good question to ask them. You can also go to the Employment Insurance website, see if you can find information on this or contact them and see what help they can provide.
Unlocking for a second time
What if the hardship hasn’t passed & I need to go in the fund a second time?
Better yet, what if amount left is low & I would prefer to just withdraw the entire amount?
Unlocking lira for second time
Can I unlock my pension for second time in one year I am really having financial problems.
Am behind on two months rent, I also co-signed for my daughter to rent a place. She have financial hardship and know they are asking me to pay it.
Re: Unlocking lira for second time
If your pension is a locked-in RRSP and it’s within the small balance amount that permits you to withdraw funds, you should be able to make as many withdrawals as you want until the money is gone. Our best suggestion though, would be to call 1-888-527-8999 and make an appointment to speak with a non-profit Credit Counsellor. It’s possible that they may be able to help you find other options other than using your pension money.
Can I unlock my lira for a
Can I unlock my lira for a second time
Yes, as long as you qualify
Hi Danny, There is no limit to the number of times you can withdraw funds from a LIRA as long as you meet the requirements to withdraw funds.
Financial hardship +medical health issues unlock lira
Need assistance to unlock my locked in due to financial hardship and health reason
Unlocking LIRA
Hi, you’ll need to find out which financial institution is holding your LIRA. Then you’ll need to contact them and see which legislation governs your locked in funds (either provincial or federal). Once you know which provincial legislation (or federal) your funds are locked in under, you can see if your situation would qualify for an early redemption. You may need to look into this yourself rather than relying on the financial institution to advise you since this isn’t the sort of thing that most financial professionals deal with on a regular basis.
Transferring pension from one province to another
I have a pension in saskachewan and have been living in Alberta for 15 years now. I am currently in financial hardship how do I go about doing this because saskachewan docent have this clause. I find it frustrating trying to make ends meet at the moment and I have a fare size pension. Ease help
Two Suggestions
Hi Scott, To help you figure something out, we would offer two suggestions: 1) You could contact the company that holds your pension and see if there is any possible way they can release some of the money (if there is a way, someone with a lot of experience who works there might know), and 2) try sitting down with a local non-profit Credit Counsellor. Go over you situation with them, and see if they are able to come up with any solutions that might work for you. You can find one here: https://www.mymoneycoach.ca/budgeting/loans-debt-credit/get-debt-help . There is also a link near the top of this article.
ON Financial Hardship Medical Expenses for Dependent
My mom is currently sick and has been in and out of the hospital in the Philippines. We have incurred medical bills… and would want to withdraw some $ on my LIRA. I checked the forms but it is asking for a licensed medical practitioner to sign the forms… but how can I ask a doctor here to certify for my mom’s condition? I am currently securing a phycician’s certificate for my family Care Leave application for EI as she is already critical condition—to be signed by mom’s doctor in the Philippines. Would that suffice as supporting documents together with the receipts of bills?
Unlocking LIRA for Medical Expense Hardship
You’ll need to contact the financial institution that holds your LIRA and ask them these questions. If you can satisfy them that you have met the appropriate requirements, then they can release your funds to you.
Pension Loop Hole?
Ontario Teacher’s Pension Fund Question.
I received a lump sum settlement from my LTD insurance carrier in 2012. My earliest retirement date is May 2019 as outlined in settlement. I find myself in financial crisis with experiencing less interest on lump sum than anticipated along with increased medical bills – this lump sum will not sustain me until May 2019. Are there any loop holes regarding my teacher’s pension where I can access a one time sum under these circumstances to help me reach my retirement date without becoming homeless??? Thank you.
Re: Pension Loop Hole?
Hi Lorraine, We’re sorry to hear about your situation. In your case, we would encourage you to contact a knowledgeable person within the Ontario Teacher’s Pension Fund and ask them if there is a way you can get early access to your funds because of your hardship. We’re not familiar with your pension’s rules, but hopefully they’d have some sort of hardship provision you could possible tap into. If you can find a knowledgeable, compassionate person to speak with, hopefully they can either help you out or direct you to something else that could help tide you over until May 2019. If you have a financial planner or accountant, it’s possible that they may have more information on this too, but start with someone at the pension plan, they’re likely to know the most.
I don’t have enough $ for food but 30,000 locked in Federal
I’ve already taken out $ for hardship. I needed to buy a car. I have orthostatic hypotension and have fallen on bus and while walking. I need the car for health reasons. Now what do I do to get some extra to last me till Dec. OAS doesn’t start till Nov 30th. I don’t know how long I can go on.
How to work things out
Hi Anne, We’re sorry to hear about your situation. We would strongly suggest that you contact the Credit Counselling Society at 1-888-527-8999 and make an appointment to speak with one of their Credit Counsellors. They can help you take a look at your whole situation and hopefully help you put together a plan to deal with these challenges. They may have suggestions in regard to options you may not have considered or other places you may be able to find some help.
No Longer a Canadian resident
I am in Canada on a working permit. I am leaving Canada soon and I would like to move my funds when I move, mostly out of convenience but partially I am worried about losing access altogether after I leave. i cannot find any information on this clause and would like to know more to see if i am able to enact this clause.
Re: Leaving the country
Hi, the best thing to do would be to talk with the financial institution that holds your locked in funds. If your balance is within the small balance unlocking amount for the legislation that governs your locked in funds, you should be able to take the money out without any problem. If your balance is over the small balance unlocking amount, then you may have to leave the funds there until you qualify to withdraw the funds. If you leave the country, you should be able to provide your financial institution with your contact information and keep your account active. Tell them about your situation and ask them what they would suggest you do.
Unlocking current pension to catch up on possible foreclosure
My wife and I are both with Manulife. We contribute through our work. She has a DPSP (deferred Profit sharing plan) while I have a RPP (Registered Pension Plan). Both of us have been told by them that unless we quit or retire we are not able to access that money since we still work for the company where we contribute. We are in a bind with our mortgage right now and I need to catch up on my arrears in the next couple of months before I can renew, so we are in a tight spot. How can I go about through some sort of loophole to get some of that money out?
See if any of these options will work for you
Hi Phil, It’s difficult replying to a question like this without more information, but here are some suggestions to help you find some personalized help.
1) See what can be done about the mortgage first. Touching your retirement funds should be your very, very last option. If your mortgage is insured through CMHC or Genworth, they have programs designed to help people who are struggling with their mortgage. These programs can include many options. Contact one of these companies if your mortgage is insured through them and then follow their process. Alternatively, contact your bank and speak with someone there who has many years of experience. See if there is any way the bank can work with you to work something out.
2) Speak with a non-profit credit counsellor to see if they can offer any insights or help. Depending on your situation, they may be able to suggest some things you may not have considered or were aware of. They would also look to see if any kind of debt relief program could help you.
3) If all of these suggestions don’t help you find a workable solution, then try and speak with a very experienced, sympathetic person at your pension company to see if there isn’t some way you can work something out. If your pension is governed by the laws of Ontario, Alberta, or Nova Scotia, then potential foreclosure is a hardship reason that can potentially be used to unlock funds.
Try focusing on the first two groups of suggestions above and only come back to number three if nothing else works.
LIF
If once you start a minimum annual withdrawal for hardship reasons, are you able to discontinue those withdrawals after the need is over?? Person’s age is 63.
Withdrawing Locked-In Funds for a Hardship is a Lump Sum
When you make a withdrawal for hardship reasons, it is a lump sum withdrawal. There is no payment schedule. You can take as much or as little of the RRSP funds as you wish within the maximum amount you are allowed to withdraw for the reason you qualified for. Remember, though, the more you take out, the more tax you will have to pay, and the less money you will have left for your retirement years.
Small amount unlocking
I live in BC. I have a dcpp at around $9,000 with sunlife. I’ve been waiting for my options but I’d like to take the lump sum. I’m wondering if it has to be 20% or less of the ympe for the year of just the actual balance or if it’s the commuted value that’s taken into consideration?
Small amount unlocking
Hi Erica, Sorry we can’t help much with this question. You’ll need to find out from SunLife what the restrictions are on your plan. What often happens with a DCPP is that when someone leaves the employer that set it up, they can choose to transfer it into a locked-in plan. If that is done, then the opportunity to unlock the funds for the hardship reasons listed above could apply. Normally with locked-in funds, a 20% of YMPE withdrawal rule would apply to the actual, current balance of the plan. If you want to withdraw funds under the small amount rule, the plan balance would normally need to be equal to or less than 20% of YMPE.
New LIF
I have 2 questions: can one transfer amounts from the new LIF into an RRSP?? If yes, how much and can it be ‘in kind’??
Secondly, if one starts minimum withdrawals from the new LIF, can they be suspended?? The person is 63 years old.
LIF Question
Hi Peter, You’ll need to ask your financial institution that holds your LIF these questions.
How long after filling out
How long after filling out forms does it take to get your money deposited from a locked in RRSP
Time Required to Redeem Unlocked Funds
It will depend on your financial institution and how things are setup. Hopefully they can give you an idea of how much time their process will take. However, in a best case scenario where your locked in RRSP is held at the same bank branch as your bank account, your reason for unlocking is easily verified (Small Balance Unlocking would be a good example), and you are dealing with someone at your branch who is familiar with unlocking funds, then you would receive your money immediately in the same way you would if you redeemed some normal RRSP funds. If more verification is required, people involved aren’t familiar with unlocking locked in funds, or someone else’s approval is required, then each of these factors could of course add more time to the process.
I am a former employee of the
I am a former employee of the federal government and have a locked inLIRA held with my bank. Would I be able to access a potion due to financial hardship and how would I proceed?
How to Proceed with Unlocking Funds
Hi Laura, You’d need to do two things: 1) Identify the financial hardship reason that you qualify for, and then 2) make an appointment with someone at your bank who is familiar with locked-in funds. The person at the bank will then check to see if you qualify for the hardship reason and then process your redemption if you do qualify.
Timeframe to process withdrawing from Locked In RRSP?
How long does it take to receive the funds I’m requesting from my Locked In RRSP? My bank called a week after I was there to say one form needed my signature which I believe is the bank’s errorr, but does that delay the process? I’m really struggling.
Factors that can affect the locked-in rrsp redemption timeframe
The length of time it takes to receive your locked-in RRSP funds all depends on your financial institution, where the locked-in funds are held, and what they are invested in. If the funds are held at your branch in something as simple as a term deposit, you could receive the funds the same day if the person you’re dealing with knows exactly what they are doing and doesn’t require out-of-office approval. If your locked-in funds are located at a distant location or invested in some sort of fund, the redemption will take longer. Waiting for a week to receive your funds doesn’t sound surprising, and yes, an error would delay the process further. When signatures are needed on legal arrangements like these, it doesn’t matter if your financial institution made the mistake. They can’t overlook it. They still need all the required signatures. Unlocking locked-in RRSP funds early is an unusual transaction that needs to be done properly according to the rules. So for someone to make a mistake in the process also wouldn’t be surprising. In the big scheme of things in the financial world, this would likely be a low priority transaction unless the person helping you understands the urgency of your financial situation and does their best to move it along quickly.
Unlocking for Consumer Proposal/Bankruptcy
I have a federally locked in account and I had to enter into a consumer proposal. The terms are quite difficult and I have difficulty staying afloat and may have to declare bankruptcy if I cannot get some relief. I have a substantial amount locked in an would like to know if this would qualify for a financial hardship withdrawal.
There’s a bigger issue
Thanks for asking your question. Your locked-in money is only protected from your creditors as long as it stays in your locked-in RRSP. As soon as it comes out, your trustee needs to be informed, and it will likely need to be distributed to all your creditors. You’ll only get what’s left after they are all paid. So taking it out will only benefit your creditors. You should leave it in for your benefit when you retire. This leads to a more important point. A Consumer Proposal is supposed to provide you with debt relief. If it isn’t and you’re finding it too difficult, you should go and see your trustee and have a conversation with him or her about this. If bankruptcy is what’s going to work best for your situation, then that’s what you should do. If you drag out your Consumer Proposal but it ultimately collapses, then you could have wasted many years of making payments on it for nothing. Bankruptcy is way cheaper, faster, and has pretty much the same consequences as a Consumer Proposal. So don’t be afraid of it if it actually makes sense for your situation. Please go speak to your bankruptcy trustee about your situation. It sounds like they need to help you further. If you’d like another objective perspective on your situation, you could also make an appointment to speak with a local non-profit credit counselling organization and go over your situation with them.
Unlocking pension-rrsp
Hi I noticed your answer concerning a consumer proposal and bankruptcy. That the trustee will take what you unlock. This only true if your locked rrsp is through a bank. If your rrsp is through a insurance company like SunLife the trustee can not touch it.
Your rrsp’s are protected from a consumer proposal and bankruptcy through an insurance company
All RRSPs are Protected from Insolvency
Hi Roland, Thanks for your comments. Our understanding of the question above is that the individual would like to unlock their funds for the purpose of fully redeeming them from their RRSP. They need this money to make ends meet. So their intention is to completely withdraw the funds from their RRSP. RRSPs are always protected from insolvency at every financial institution. The only thing that is not protected are recent contributions (last 12 months) to regular (non-locked-in) RRSPs. Regardless of who holds your locked-in RRSP, when you redeem the funds, you need to report this to your trustee if you are on a consumer proposal or going through the bankruptcy process (you have not been discharged). If you don’t report it, then the government will eventually inform your trustee because all RRSP redemptions are reported to the government. For more information on this, someone should speak with their trustee (you can have a very frank or candid conversation with your trustee about any “hypothetical” situation like this).
Bankruptcy
Do not withdraw if you think you will have to declare bankruptcy. I just went through this and yes the trustee will take it and distribute to creditors
Tax deductions
I have an income of roughly $10,000 expected for the year. I am doing an unlocking under a Federal plan for Financial Hardship. Two questions: 1/ will the lump sum that is being directed to my account have taxes taken out? (For example if I qualify for $20,000 unlocking will I only receive that amount minus 30% taxes?? Question 2/ where I have input the expected amount of income and for some reason I receive more money during this tax year at the end, how will I be affected? Will I have to give some of the money back??
Tax Deductions on Locked-In RRSP Redemption
Hi Lynn, Thanks for your question. Money in a locked-in plan is actually in an RRSP. It’s a locked-in RRSP. So when you withdraw money from it, the normal RRSP redemption rules would apply (10% will be withheld for income tax if you withdraw $5,000 or less. 20% will be withheld if you withdraw between $5,000 and $15,000. 30% will be withheld for income tax if you redeem over $15,000 from the RRSP). Since you have a low level of income, you could consider withdrawing $5,000 from the RRSP at a time – on different days – so that only 10% is withheld on each redemption. We would suggest that you consult a tax expert first or make sure that doing this won’t result in you owing extra tax at the end of the year that you don’t have the means to pay. These withholding tax amounts are meant to prevent individuals from ending up with sizable tax bill they can’t afford, but if you are sure that you won’t owe any more than 10% of your income in tax, then you could consider smaller redemption amounts. To answer your second question, we would recommend that you carefully read the qualifications for the redemption rule that you are redeem funds under. Most of the early redemption/hardship reasons qualify you for the redemption based on your current situation. If you qualify, then you’re good to go, any extra income you earn across the year doesn’t matter, and you don’t have to pay the funds back if you unexpectedly earn more money that year. Carefully read the hardship redemption rules that you are qualifying under and make sure that there is no future requirement to report your income for the year. If there isn’t, then there would be no problem, and you would only owe more as income tax if your income goes up. RRSP redemptions are of course counted as income. So if your income for the year was $10,000 but you then withdraw $20,000 from your locked-in RRSP, your annual income would then be $30,000.
Possible Correction
I noticed a possible error in the way this was written by one of the staff of this web page. The person wrote:
“Since you have a low level of income, you could consider withdrawing $5,000 from the RRSP at a time – on different days – so that only 10% is withheld on each redemption.”
I think this needs to be clarified. Possibly. I believe that you are only allowed to access the funds once per 12 months. The only way to access it 2x in a single 12 month period is if you do so within the first 30 days after you first applied for funds in that year.
So if on January 1st 2020 I took out $5,000 from my LIRA … I would get taxed at the lower rate yes.. I then normally would not be able to take any more out of the LIRA for 12 months. However I have read that if I quickly apply for more money (say another $5,000) within 30 days from the last application.. this is permitted? Is this not true?
Federal legislation allows 30 days for redemptions
Hi John, You raise an excellent point. It’s important to read the redemption rules carefully to make sure you can put together a plan that will work. In the question asked, Lynn stated that her funds were locked in under Federal legislation. In her case she would have 30 days to make multiple withdrawals if she determined that this is what she wanted to do. She would then have to wait until the next calendar year to do this again if she had any money left in her plan and if she chose to do this again. With anything like this, it’s always a good idea to run your plan by the financial professional helping you withdraw the funds so they can hopefully alert you to any problems with what you’re planning to do. Bear in mind, though, that these types of transactions are not common. So you can’t always expect front line staff at a financial institution to know a lot about this stuff. You really need to do your homework before entering into anything like this. Please don’t rely on us to be experts on this topic either. We’re just attempting to provide you with information that’s available but is sometimes hard to track down.
Time it Takes?
Hello, I’m in Ontario and have agreed with my financial adviser to submit the paperwork for the unlocking due to mortgage arrears. He told me that it takes about 2-5 business days to approve and fund my checking account. But I have read that the financial institution has 30 days to approve and fund. Do you know what the average time it takes to approve and then fund the account so I can settle with my mortgage holder? Thanks!
It shouldn’t take more than a week
The 2 – 5 business days sounds pretty normal. If the money isn’t in your chequing account within 5 business days, you should call and check and see what’s happening and again ask when they expect to have the money in your account. The redemption shouldn’t take more than a week.
Am I under Federal legislation
I currently have “federal” locked in funds. Trying to withdraw under “low income hardship”. I live in Saskatchewan, but it is not under the list, can I still withdraw under “federal”?
Looks like you’re in luck
Thanks for asking your question. The legislation your funds are locked in under is the set of rules that govern your locked in funds. Once your funds are locked in under a set of rules, those are the rules that govern your plan – not the province you live in. So if your funds are locked in under Federal legislation, you are only going to follow the Federal legislation. The fact that you live in Saskatchewan is not relevant. The Federal legislation does allow someone to withdraw funds if they have “low income.” So it sounds like you’re in luck. If, however, your funds were locked in under Saskatchewan legislation (on your locked in RRSP documentation it tells you what legislation it is locked in under), then you would be out of luck because Saskatchewan legislation does not have a low income provision.
Form 1 waiver
Hi there, I am withdrawing locked-in funds on the basis of non-residency in Canada. I have received a letter from CRA confirming that status. I am not sure if Form 1 needs to be filled out by my ex-husband. It states the form is not required when:
“Form 1 is not required to withdraw locked-in benefits if the total benefit entitlement does not exceed the amount set out in the regulations made under section 69 (1) or (2) of the Pension Benefits Standards Act.
Form 1 is not required if section 145 of the Family Law Act applies to determine the rights of the member/former member and spouse when the relationship ends. Confirmation that section 145 applies must be provided to the pension plan administrator, locked-in retirement account issuer or life income fund issuer.”
But I can’t find what either of these sections are – the amount set out in section 69 nor what section 145 is. Can you point me in the right direction?
Maybe see if your financial institution can help
Hi Kathleen, Sorry we can’t help you in this area. Our only suggestion would be for you to maybe ask the government body that issues the form for help or see if the financial institution that holds your locked-in funds can help you.
Fees with unlocking LIRA
Hi,
Turning 55 early next year and will unlock some to pay off some debt & bills -about $20k. Don’t need 50% as that would push my income to nearly 150k. LIRA held with an investment company. Just wondering about what fees are associated with unlocking. In reading your well informed column, I expect some to be held for government taxes. Just wondering what the estimated fees may typically be -govt and investment company. I haven’t been able to see this information anywhere. So my plan is the unlocking to RRSP, then withdraw and then make RRSP contribution to end of year to offset the $20k. Haven’t made RRSP contributions in years so have the contribution room …thanks in advance for any and all advice!!!
Withholding Tax is the Major “Fee” Everyone Encounters
Hi Bob, To answer your question, we’re not aware of any fees that companies charge for unlocking or redeeming registered funds. What you will encounter, though, is the withholding tax. Financial institutions are required to withhold 30% of funds redeemed when the redemption amount is over $15,000. When you do your taxes at the end of the year, you’d then find out how much of the withheld money you get back based on your total tax bill for the year. Any other fees you pay would be fees associated with the specific invest your money was in. If your money was invested in a simple term deposit, then there likely won’t be any other fees. In regards to the rest of your financial plans you mention, we would encourage you to speak with a financial expert such as an accountant or financial planner – if you haven’t already – to make sure that your next steps are moving you towards your long-term financial goals.
Not understanding why you can’t unlock your own money
If you are still employed with the company you have the funds locked away with. I don’t get that, especially if you’re in a crisis and need quick cash. I am looking to move and some extra cash would help especially since I was denied a relocation package. They give those packages for people at the top which makes no sense. The less help you need, the more willing they are to give it to you.
Locked in rrsp
My fin institution says my federal pension plan funds were locked in under provincial rules even though I was employed by the federal government. Is there any way that this can be corrected?
We don’t know
Sorry, we can’t answer this question. Our best guess would be that it is locked under whatever legislation your employer chose to set it up under. In may provinces the provincial legislation can be preferable to the federal legislation. However, since you’re asking this question, we would assume that it’s not in your case.
Can I unlock only some LIRA?
Hello, I am now 55 and want to unlock about 30% of my LIRA -no hardship reason. But my investment company advisor says that I have to unlock all of my LIRA -100% and open a LIF. They then transfer the 30% to an RRSP which I can withdraw from. Also I would get a yearly LIF amount of $1800. However, I read on another financial column that I can choose to only unlock a portion of my LIRA -the 30% I only want. I’m confused as to which one is right! Or is it me just not understanding? Also if I can only do 30% is it that the LIF payments come from the 30%? I. really want remaining 70% to stay as a LIRA. Thank you
Sorry
Sorry, we’re not the best ones to answer your question. Our knowledge is centered around the areas of financial hardship, budgeting, and general personal finance.
Claiming the withhold tax collected on a Lira unlocked funds
I was just wondering if there is a form or line in the Tax code for claiming the withhold tax collected from a financial hardship claim. Should I have received some sort of form (T4RIF ?) that would allow me to include it on my income tax form ? Sorry, just a little confused on this one.
Yes, you do get the equivalent of a T4
Hi Kevin, The answer is yes. Whenever you redeem registered funds, the government considers the redemption to be income to you in the year that you redeem it. So, yes, your financial institution will mail you the equivalent of a T4 form that shows how much money you redeemed and how much tax was withheld (just like your employer gives you a T4 that shows how much they paid you for the year and how much tax they sent to the government on your behalf). You would then give this form to your accountant or enter the numbers into your tax software and maybe get some of that money withheld for tax back if you don’t end up owing that much. If you haven’t received this form already, contact your financial institution and see when they plan to mail it to you.
small balance unlocking
I have rrsp funds that have been transferred from employer pension plan to a nextstep plan with greatwest life after I left the company.They are currently locked in,the amount is only around $8000…can I unlock and withdraw in alberta using the small balance unlocking rule?
Yes, it sounds like you can
Yes, it sounds like you can unlock those funds using the small balance unlocking rule. A lot of people are unaware of this rule. So if you can print off something from the government of Alberta that shows this rule, then if the person at your financial institution is unfamiliar with it, they can see that it exists and work with you on this. Here’s a page that shows the rule: https://www.alberta.ca/assets/documents/pensions-form-fsrp0023-print-2020.pdf
can I do a financial hardship unlock while receiving EI
Question I lost my job and started getting EI and I found out it
turned into a CERB automatically. I panicked during covid 19 and
sold my locked in rrsp due to financial hardship. Is EI considered
income? If so would I be penalized if my income is overstated ? If
so how can I reverse this I don’t want to be fined 100k ? I
don’t see any where in the list below that EI is considered income on the https://www.fsrao.ca/industry/pension-sector/pensions-forms/2020-user-guide-financial-institutions-financial-hardship-unlocking.
We can’t answer your questions
Hi, Unfortunately we’re not qualified to answer your questions. We’d suggest you speak with an accountant about this since it’s a tax issue. If we were to offer a few comments as an unqualified observer, yes, it does appear that both EI and the CERB are taxable income (if you Google it, you can find the CRA stating both of these are taxable income on their website). We are guessing that you withdrew your money under the “Low Expected Income” reason. This asks you for your “expected” total income. This is only a guess and is subject to a degree of change – especially in light of world changing events such as COVID-19. A reasonable person is likely going to be a little more gracious than normal when reviewing hardship situations that result from COVID-19 (that seems to be universally expected these days). We are not experts in the Ontario Financial Hardship Unlocking legislation, but the new rules effective in 2014 state that “it is the responsibility of the financial institution which holds…[your] locked-in accounts” to review your situation and see if you qualify. If they determine that you qualify and release the funds to you, then it would appear that at that time you qualified. It’s possible that you might also benefit from talking things over with a credit counsellor. Feel free to contact a non-profit credit counsellor near you and chat things over with them. They are not experts in this either, but they can possibly point you in the right direction and give you some peace of mind in going over your situation with someone who is knowledgeable about helping people in tough financial situations (their help is also free).
Financial hardship unlocking due to low income
Thanks for your response. Yes I spoke to everyone from the accountant, Credit Counsellors and Td bank. And they keep giving me the same answer they don’t know. But would you say if employment insurance is not listed on the site than it is safe to assume that if I don’t see it on the list. Than they won’t fine me 100k for overstaying my income?
See if your accountant can help you gain some clarity
Unfortunately you’ve entered into an area that not a lot of people have direct experience in. We’re glad to hear that you’ve sought advice from a number of people. In regard to being fined for overstating your income, your accountant should be able to advise you on that or possibly give you some direction in regard to contacting the government to seek some clarity on this issue.
Can you unlock before age 55 due to financial hardship in ONT?
With the pandemic worldwide difficulties many people are looking to access some extra funds. If a person will be in financial hardship because their employer is closing for good and there is no anticipation for new work can they access some funds even though they are only 38 years old?
Maybe the Low Income Redeption Reason Could be an Option
Even though the government has made adjustments to some areas of our financial system to accommodate the COVID situation, redemption rules for locked-in funds so far remain the same. They are laws that would need to be amended by the provincial government. So, yes, you do have to be 55 to do the small balance redemption in Ontario. Based on your stated situation in Ontario, it sounds like the “Low Income” unlocking provision may be the only one that could come close to helping you. The details can be seen in these two places:
https://www.fsrao.ca/industry/pension-sector/pensions-forms/2020-user-guide-financial-institutions-financial-hardship-unlocking and
https://www.fsrao.ca/media/1161/download .
Basically you can use the “Low Income” unlocking rule if your expected income for the next twelve months will be $39,133 or less.
Unlocking LIRA saskatchewan
Iam 33 years old and having a financial hardship in stage of my life. Can i unlock my
Lira account with my bank? Its currently in a direct bokerage account for trading stocks.
There are 3 Reasons that Allow Early Redemptions in Saskatchewan
In Saskatchewan, there are three reasons that can allow you to redeem your locked in funds early: 1) if you are no longer a Canadian resident, 2) if a doctor certifies that you have shortened life expectancy, or 3) your balance is less than $11,740. If your plans balance is less than $11,740, you can apply to your brokerage company to redeem your funds. If you’ve recently lost your job or had your hours reduced, you could see if you qualify for one of the new government income support programs: https://www.nomoredebts.org/coronavirus . You could also speak with a local, non-profit credit counsellor (1-888-527-8999) and see if they can find a way to help you make it through your current financial difficulty.
Small balance locked in funds
I live in Nova Scotia. I am 46 years old and have a small balance locked in RRSP under 11000 from my first ever job which eventually closed . Can I cash these funds out or move them to a regular RRSP?
Yes, you should be able to unlock your rrsp
Yes, if your RRSP is locked in under Nova Scotia or Federal legislation, you can unlock it because its a small balance and either withdraw it as cash (minus withholding tax) or you should be able to transfer it to a regular RRSP and then redeem any funds in the future if you really need them.
Unlocking locked in RRSP
I contacted my bank who is holding my small balance locked in RRSP of 9000 and they told me I had to wait till I am 65 but I can access it at 55 can I not? Like I said I am 46 with the small balance under 11180 so I am confused on what I can do as there is also the small balance at 65 also.
Here’s a link to Nova Scotia’s list of financial hardships
Hi John, Sorry, we made a mistake. We thought that Nova Scotia allowed the unlocking of small balances regardless of your age. We just carefully reviewed Nova Scotia’s unlocking rules, and your bank is right, they don’t allow it at your age. If you look at Nova Scotia’s “Form 12 – 2020 Financial Hardship Application”, in section 4 it lists some criteria that you might qualify for if your situation is really tough. Copy and paste this link into your browser to view the document: https://novascotia.ca/finance/PDFs/Form12-Financial-Hardship-Application-Revised.pdf
Takng out funds from a locked in rrsp
I recently had triple by pass surgery and my have not worked in the last 5 months ..income is very small …i have 2 individual locked in rrsp from 2 different companys that went under years ago and the was paid a lump sump from both these companys . I would like info on thenookprocess to cash them out and the tax i woulg pay or penalties .thank you
Who to talk to
Hi Blair, We hope you heal quickly from your surgery. In regard to withdrawing money from your locked in RRSPs, you’ll need to make sure that you qualify for one of the rules above based on the provincial legislation that governs your plans. The tax you will pay depends on the amount you withdraw. 10% is withheld for income tax if you withdraw $5,000 or less. 20% is withheld if you withdraw between $5,000 and $15,000, and 30% is withheld for income tax if you redeem over $15,000. To look into this further and get your questions answered, we would suggest that you speak with a representative of the financial institution that holds your locked in funds.
PEI
What about PEI?
Am I able to withdraw all of my pension pr just the amount that I personally added?
Low income and awaiting CPP Long Term Disability Benefits to begin.
Check your documents to see what province it is registered under
Hi Mark, To our knowledge, PEI doesn’t offer any of the early withdrawal options listed above. Check your locked-in RRSP documents and see what province’s locked in legislation they are registered under. It may not be PEI. Whatever province it is, those are the rules you will have to work with.
Unlocking LIF at 55
My husband has a LIF, in a self directed investing account, and is turning 55 in Jan 2021.
Is he able take out 50% of its current value when he turns 55?
Only certain areas allow this
If his funds are locked in under Alberta, Manitoba, or Federal rules, then that may be an option. Check to see what legislation governs his plan. It will say on his documents, and then have a look at the rules for that province (or at the Federal rule if it’s locked by federal legislation).
LIRA Pension Account
I have a LIRA account based out of BC.
I have been living in Alberta for the past 25 years and have just recently retired and started drawing funds from it.
These funds are not enough to meet my monthly living expenses and I need to draw more than they are providing.
The financial company that my plan is through can’t seem to get past the red tape and have been of absolutely no help to me.
What should I do?
Thanks.
Check out BC’s Low Income Withdrawal Provision
Hi Ken, Have a look at BC’s “Low Income” withdrawal provision. If your expected income over the next 12 months is less than $41,067, you may be able to withdraw additional funds.
Low income unlocking (ON)
hi, I want to unlock my LIRA under low income financial hardship, and although under employed, I estimated that my income over the next 12 months will be 38k allowing me to take out about $2000.00, which will make me eligible for step 2 small balance unlocking.
what if I end up making more money then I estimated?
thank you,
Hardship in Newfoundland
Since a Covid has been on the rise everywhere it has affected many families like myself financially. I’ve keep close contact with our premiers office who did provide me me and many others with a letter stating as of March 1st 2021 locked in pensions plans can be accessible due to financial hardship and to contact your financial institute for more information.
I have contacted my financial institute who has no knowledge of this issue at all . They said they were overwhelmed with calls and questions about this unlocking of funds . I fall under every category to access my investment which I desperately need before I lose everything I have . Anyone with any information or comments they can share n the issue ?I have reached out to my premier again with no response yet Thanks
Thanks for the info
Thanks for the heads-up. We’ll update this page to add Newfoundland.
Eligibility for EI if cashing out LIRA due to financial hardship
If I cash out my LIRA (Locked-In Retirement Account) due to financial hardship, am I still eligible to collect EI?
Check the EI Rules
You’ll need to check the EI eligibility rules.
LIRA from manitoba
Hello, My question is: I have some amount from my previous job in Manitoba. I have since moved to Alberta 8 years ago and the money has since been transferred to BMO here in Alberta. Would I be able to unlock the LIRA due to financial hardship since I now live in Alberta? Or does the Manitoba rule still apply?(manitoba does not allow financial hardship as a reason for unlocking.) Your article is very helpful. Thank you
Original Legislation that Funds are Locked In Under Applies
The provincial rules that the funds are locked in under are the rules that govern your locked in plan. Where you live now or in the future doesn’t impact that. Your bank is bound to follow the legislation that your plan was originally locked in under.
Economy crash
Hello, any chance that another unlocking justification in the near future could be the great possibility of economies crashing? It already seems unfair that we can’t access our own money as we see fit, but being forced to keep our money in an account that has a high probability of losing in this volatile market and economy due to covid should require a choice to take it out.
Look into re-allocating your funds
While you may not be able to remove your money from the locked-in plan, you probably have the ability to choose what types of funds your money is invested in. So if you’re not comfortable exposing your money to market volatility, you should be able to choose a more conservative fund with far less volatility. Setup a meeting with the company that holds your locked-in funds and have them reassess your risk tolerance and your financial goals. It sounds like it may be a good time to re-evaluate your investments and re-allocate them accordingly.
Financial Hardship Withdrawal
I recently lost my job and have a LIRA. I have applied for EI. Can I apply for Financial Hardship under “Low Income”? Must i include my EI in the calculation or is that excluded? Will withdrawing from my LIRA delay my EI Payments?
Sorry, we can’t fully answer your questions
Hi Stephen, We’re sorry to hear you lost your job. To be able to withdraw your locked in funds under the “Low Income” reason, this would have to be a provision of the provincial legislation your funds are locked in under. So if you live in Ontario, BC, Alberta, Nova Scotia, or have a Federal locked in plan, that would be an option (see the chart above in the article). In regard to including your EI in the income calculation, you’ll need to carefully read what they are asking in the form and then answer the question to the best of your knowledge. In regard to your EI payments being effected by withdrawing funds from your locked in plan, that’s a good question we don’t know the answer to. It may be wise to review the EI rules to make sure you don’t disadvantage yourself in any way. Generally speaking in an ideal world, we’d suggest you leave your locked in funds as a last resort until EI and every other option is exhausted. However, we recognize that these days things are often far from ideal for many people.
Unlocking, locked in RRSP
How can I withdraw some of my locked in RRSP.
Figure out if you qualify for a permitted reason
Hi, To withdraw money from your locked in RRSP, you’re supposed to follow the withdrawal rules that govern your plan. These generally try to keep you from withdrawing the money until your retirement. However, if you have a financial hardship that meets the criteria of one of the reasons listed above in the article and the provincial legislation your funds are locked in under allows that reason, then you can withdraw money early based on the early withdrawal rule that you qualify under. If you have any questions about your locked-in funds, speak with the financial institution that holds the funds. They can tell you which provincial legislation your funds are locked in under, and if you believe that you may qualify to unlock funds early based on an allowable reason, they should be able to help you with that too.
Non-resident
I am a non-resident of Canada since 2015 and have $100,000 in a locked in mutual account. I would like to transfer this money to the country I am now living in. I have called three times and have received three different answers from three different people. Do you have any suggestions for moving forward?
You should find the rules that apply to your situation
Sorry, we don’t have any experience with transferring locked-in funds out of the country. If you read through the provincial or federal rules that govern your locked-in funds, you should be able to see what the provisions are. It may be that you have to wait until the appropriate retirement age to redeem the funds and then transfer them, but we don’t know and haven’t looked into it. The fact that you were given three different opinions by your financial institution probably shows that this is something that is so rarely done that few people know the exact answer. This is another reason why you should look at the rules that lock in your funds. If you know the correct rules, then you can cite them and insist that they be followed. If you are able to move the funds, this might accelerate the process since you then won’t have to wait for people at the financial institution to make time to sit down and find relevant rules from scratch. Being shown in advance which rules they need to read over would likely help them quite a bit.
Can I access my LIRA to pay debt
Hello , I have myself in some credit card debt that’s getting unsustainable. Can I access my LIRA to clear my debt ?
LIRA can’t help with credit card debt by someone else can
Sorry, unfortunately taking money out of a locked in plan to pay off credit card debt isn’t a reason that is allowed under any provincial or federal rules. The only debt you can pull money out for is if you’re facing potential foreclosure on your home. Our best suggestion in you case, however, is to speak with a non-profit credit counsellor. They can help you explore all your options to deal with your credit card and get your finances back on track as quickly as possible. It’s possible that they can help you explore a much broader range of options than you would be aware of. We’d suggest giving the Credit Counselling Society a call at 1-888-527-8999. You can even chat with them anonymously if that’s the most comfortable for you.
I already had to withdraw from my Lira account this year
I already had to withdraw funds for my lyra account this year. I was unable to work because of a personal tragedy and because of mental illness. I’m now in a position where I still cannot work and yet I still need to pay my bills and eat. I don’t understand why if it’s my money I can’t withdraw a second time. I’m not looking to withdraw over what I have in the account. And I’m not looking to live until I’m 65 anyway. So what do I need to do to withdraw again this year?
Here’s something else you could look into
We’re sorry to hear of the tragedy and immense challenges you’ve experienced. We’d suggest you review the rules that govern your locked-in funds to see if you can withdraw more funds this year. In Ontario for example, they have four permittable reasons for unlocking funds. However, they only allow one withdrawal per calendar year for each reason. So for someone who lives in Ontario and already withdrew funds this year under the “Low Expected Income” reason, they would not be able to withdraw money for that reason again until January 1 of next year. However, if that person was struggling to pay their rent or mortgage, that is another valid reason to withdraw funds (but only once per calendar year). So if your province limits hardship withdrawals to once per year for your original reason, then see if another reason will work for you. Speak with the financial institution that holds your locked-in funds and explain your situation to them. Hopefully they can help you look carefully at the situation and see if they can find some way to work things out.