Ontario creates LIFs

LIF holders no longer have to buy annuity at age 80.

If you live in Ontario and have money in a Life Income Fund (LIF), you no longer have to convert all your assets to an annuity at age 80.

The province recently announced it is following the lead of Alberta, Saskatchewan and Manitoba in creating Locked-In Retirement Income Funds (LRIFs) as an option when people turn 80.

LRIFs basically allow you to maintain your LIF until you die, under the same broad rules – minimum and maximum annual withdrawals (there are no maximum limits on a regular RRIF). However, the LRIF provides a more flexible payment schedule than a LIF. Retirees can base their withdrawals on the previous year’s investment return, or the minimum permitted under the Federal Income Tax Act. In the case of the new Ontario LRIF, any unused withdrawal room can be carried forward from year to year.

CARP has been actively campaigning to have the LRIF option made available across the country, so the announcement by Finance Minister Ernie Eves comes as welcome news.