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Changes give Canadians more financial
flexibility
May 8, 2025
Improvements to Life Income Funds Give Canadians
More Financial Flexibility
The Department of
Finance today announced that regulatory changes are now
in effect allowing Canadians to take advantage of
improvements to the administration of Life Income Funds
(LIFs) that were proposed in the latest federal
budget.
“Many people, such as seniors,
pensioners and individuals facing financial hardship,
will now have greater freedom to move their investments
and use the money when they want, for what they want,”
said Jim Flaherty, Minister of Finance. “These changes
simply reflect the greater range of employment and
lifestyle choices available in our fast-paced global
economy.”
The changes take effect
immediately. However, financial intermediaries may need
some time to update their systems in order to offer
these new options.
Anyone with an existing
locked-in RRSP or LIF will have to purchase a new
contract to take advantage of this new
flexibility.
The changes enhance the
flexibility to withdraw funds from LIFs through three
provisions, which are now operational:
>
individuals 55 or older with total holdings in
federally-regulated locked-in funds of up to $22,450
will be able to wind up their accounts or convert to a
tax-deferred savings vehicle with no maximum withdrawal
limit, such as a RRIF or RRSP;
> LIF
holders will also be entitled to a one-time conversion
of up to 50% of their holdings into a tax-deferred
savings vehicle with no maximum withdrawal limit;
and
> those facing financial hardship will
be entitled to withdraw up to $22,450 a year.
Minister of Finance News
Release:
http://www.fin.gc.ca/news08/08-037e.html
Regulations
Amending the Pension Benefits Standards Regulations,
1985:
http://www.fin.gc.ca/drleg/penmay08e.html
--
Disclaimer:
Eileen Reppenhagen CGA does
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