Q&A: Alternatives to LIRAs


Question: My wife and I have an option to receive the commuted
value of her pension and have begun an interview process to determine whether
to select a new advisor, confirm our current financial advisor, or to move the
money into a self-directed account.

Would you tell us if you are aware of any alternatives to LIRAs, into which
we might be able to transfer the funds? Preliminary calculations indicate that
our returns would be superior to leaving the money in the current employer’s
pension plan, but the idea of being even more ‘managed’ by government is somewhat
distasteful to both of us, as is the idea of being forced to buy an annuity
with remaining money when the age limit is reached. – M.S.

Gordon Pape answers: A LIRA (locked-in retirement account)
or LIF (life income fund) is the only option for commuted pension money that
I know of. I suggest you review your calculations to determine if this is really
a better choice than a deferred pension. If the pension is from a defined benefit
plan, it is usually the safer choice. In all the jurisdictions that I am aware
of, LIFs no longer have to be converted to annuities at age 80 – that
includes federally-administered LIFs.

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