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Self-Directed Life Income Fund (LIF) †
A Life Income Fund (LIF) is used to convert your locked-in pension savings (from sources like former employer pensions or a Locked-in Retirement Account (LIRA) or Locked-in Retirement Savings Plan (LRSP)) into a stream of retirement income. You must withdraw a certain percentage each year based on you or your younger spouse's age. In most cases, there is some flexibility for additional withdrawals up to a maximum percentage governed by the applicable pension rules associated with the account.
With a self-directed LIF, you control your investments through self-directed tools and platforms. You can choose how your funds are invested, potentially aligning your strategy with your unique risk tolerance, time horizon, and retirement income goals.
Things to consider to open a LIF
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Minimum Annual Withdrawal |
Minimum percentage of the total value of LIF that must be withdrawn each year. |
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Mandatory withdrawals |
You must start making withdrawals the year following the year you opened your LIF. |
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LIF minimum percentage based on age |
The minimum percentage you must withdraw increases as you get older and revises on January 1st of each year, until age 95 when it caps at 20%. |
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Taxable income |
LIF funds count as taxable income in the year you withdraw them. |
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Maximum withdrawal limit per year |
Unlike Registered Retirement Income Funds (RRIFs), there is a maximum withdrawal limit per year that varies by pension jurisdiction. |
Comparing RRIF to Life Income Fund (LIF) at TD Direct Investing
Both RRIF and LIF are designed to help fund your retirement
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RRIF |
LIF |
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|---|---|---|
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Primary source of funds
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Usually created by converting a Registered Retirement Savings Plan (RRSP) or an employer pension plan (non locked-in assets)
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Usually created by converting a locked-in retirement account (LIRA/LRSP), locked-in RRSP, or an employer pension plan (Locked in assets)
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Minimum age requirement
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Must be of age of majority in your province
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Age limit varies by pension jurisdiction
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Withdrawal limit
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Has minimum withdrawal requirement but no maximum withdrawal limit
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Has a minimum and maximum withdrawal limit based on certain criteria and varies by pension jurisdiction.
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Tax on Withdrawals
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Fully taxable
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Fully taxable
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Investment choices
Got questions? We have answers.
The minimum withdrawal is based on your or your younger spouse's age and the value of the fund as of January 1, similar to RRIFs. The maximum withdrawal is set annually based on pension legislation. Generally, maximum LIF withdrawal is based several factors, such as the market value of the LIF at January 1 and the applicable age. There are other factors which vary by pension jurisdiction.
LIF pension regulations, including withdrawal limits and unlocking options, can vary significantly by provincial or federal jurisdiction. It's important to consult the specific rules applicable to your LIF or LIRA/LRSP to ensure compliance and to understand your options.
Yes, you can transfer funds from one LIF to another LIF that you own, as well as to a RRIF, in certain circumstances.
In most provinces, you can use your spouse or common law partner's age to calculate your minimum withdrawal amount. This must be set-up when you transition your Locked-In Retirement Account (LIRA) or Locked-In Retirement Savings Plan (LRSP) to a LIF. You can not change this option in the future.
If you die, your spouse or common-law partner (if applicable) is generally entitled to the funds and may be eligible to transfer the remaining balance to their own LIF, RRIF or RRSP depending on their age and applicable pension legislation. If there is no spouse or common-law partner, the remaining balance is paid to your designated beneficiary or estate.
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