Changes To Rules Relating To LIFs And Other Locked-In Accounts

Ontario has changed the rules governing life income funds ("LIFs") and other locked-in accounts. Some of the changes are effective immediately and other changes will be effective January 1, 2008. The new rules provide for partial unlocking and remove the requirement on owners of LIFs to purchase an annuity on reaching age 80.

The following are some key changes:

1. Effective immediately, the owner of a LIF is no longer required to purchase an annuity by the end of the year in which he/she reaches age 80.
2. The owner of a locked-in retirement account ("LIRA") can keep monies in his/her LIRA until the end of the year in which he/she reaches age 71. The owner of a LIF or a locked-in retirement income fund ("LRIF") can transfer the monies in his/her account to a LIRA prior to the end of the year in which he/she turns age 71. These parallel the changes to the Income Tax Act (Canada) extending that date by which pension benefits must be paid from 69 to 71.