LIF: Life income fund
The LIF is the result of the conversion into retirement income of the capital accumulated in a LIRA or a locked-in RRSP.
Key features of a LIF
The LIF is a registered fund that serves as an extension of your locked-in retirement account (LIRA) or your supplemental pension plan. Money transferred into the LIF is sheltered from taxes and can be withdrawn for retirement income.
There is no age minimum for converting your LIRA or RSP to a LIF, and drawing income from it under certain conditions (see the Retraite Québec website). But at the age of 71, you will have to transfer.
The government requires the withdrawal of a minimum amount each year, calculated by a percentage that increases with your age. Amounts exceeding the minimum withdrawal are taxed as income.
Unlike a RRIF, for which there is no cap to the amount you can withdraw, there is a cap yearly maximum for a LIF. The maximum LIF withdrawal is calculated based on age, the balance of the LIF account and the reference rate set each year.
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