In general, money transferred from a registered pension plan into a locked-in account, such as a locked-in retirement account (LIRA), life income fund (LIF) or locked-in retirement income fund (LRIF), can only be used to provide income after retirement.

In certain cases, however, you can apply for special access to a limited amount of the funds you hold in one or more of those accounts. In some cases of financial hardship, funds may be withdrawn as well in certain situations of non-hardship. 

There are five financial non-hardship categories that may be considered when making an application:

  1. Your life expectancy has been shortened to two years or less
  2. You are at least 55 years old and the total value of the funds in all of your locked-in accounts is less than 40% of the Year's Maximum Pensionable Earnings (YMPE)
  3. The amount of money transferred to your locked-in account exceeds federal Income Tax Act limits
  4. You are a non-resident of Canada and 24 months have passed your departure from Canada
  5. You transferred money into an Ontario life income fund that is governed by the requirements of Schedule 1.1 and, within 60 days of this transfer, you want to withdraw or transfer up to 50% of the total money that was transferred to the Schedule 1.1 LIF

How to apply

All financial non-hardship unlocking applications for must be made on FSRA forms. Download and complete the form that corresponds to your application category, and forward it to your pension administrator.

Categories 1 – 4: Form 5
Category 5: Form 5.2

Review and approval

Review and approval of your application will be handled by the financial institution that holds and administers your locked-in accounts. They will determine if your application meets the legal requirements set out under the category for which you are applying, and forward the appropriate payment, if approved.

What happens when an application is approved?

If your application is approved, there are a number of points to keep in mind:

  1. Payment
    Once approved, money is paid in a lump sum, only and cannot be transferred to a tax-deferred account, such as an RRSP or RRIF.
  2. Withholding tax
    The amount you are approved for is subject to a withholding tax by the CRA (Canada Revenue Agency), variable to the amount you withdraw.
  3. Administration fees
    Your financial institution may charge administration fees, which will be deducted from your payment.

How it works

If you are approved for a $20,000 withdrawal, the CRA will get 30% ($6,000). If your financial institution charges a $50 fee (for example), you will receive a lump sum payment of $13,950.

NOTE: If you need the full $20,000, you must apply for a greater amount – but cannot apply for more than the maximum amount to which you are entitled. 

Restrictions

  • The amount you withdraw is considered income, and may affect your eligibility for other government assistance programs. 
  • Money withdrawn from a locked-in account will no longer be considered protected from creditors, and may be seized.

Learn more

Non-hardship unlocking FAQ
Read our guide to applying for special access