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Wealth Update – LIF Unlocking Strategy

Here’s a clever way to move LIF money to either an RRSP or RRIF.

As we know, LIFs have annual minimums and maximums.

The concept is to elect the maximum and move the difference between the minimum and maximum to an RRSP or RRIF.

Here’s an example from the Manulife Tax Strategy article:

Richard is a 55-year-old investor who transfers a $250,000 LIRA to a LIF.

In the first year, he can unlock the $16,275 (the maximum payment) allowed since there’s no minimum.

In the second year, at age 56, the:

  • LIF maximum is 6.57%

  • LIF minimum is 2.94%

  • The difference is 3.63%—the amount that can be unlocked is $8,481 (3.63% of $250,000 – $16,275)

So, in this example, $16,275 + $8,481 has been moved to the client’s RRSP. It remains tax deferred and, in the future, will not be subject to any maximum annual withdrawal limits.

Here’s Manulife’s piece on this subject.

As always, we look forward to your comments.

PS Please join Tony and Scott on October 30th, where they will be discussing Tony's latest Insurance Insight. You can register here

Happy Thanksgiving.

Scott Edgington

Director, Advanced Planning, Wealth

Qualified Financial Services

Jim Lyons

Regional Vice President, Business Development - Wealth

Qualified Financial Services

Kyle Gilbert

Inside Business Development Specialist - Wealth

Qualified Financial Services

Gordon Baker

Director, Business Development, Wealth Atlantic Canada

Qualified Financial Services

This communication reflects the views of Qualified Financial Services Inc. as of the date published. The information in this publication is for general information purposes only and is not to be construed as providing individual legal, tax, financial or other professional advice. Qualified Financial Services Inc. assumes no responsibility for any errors or omissions in the information contained herein nor for any reliance placed on such information. Please seek independent professional advice before making any decisions.


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