Author Topic: locked in RRSP  (Read 1166 times)


  • Pencil Stache
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  • Posts: 610
  • Location: near north Ontario
locked in RRSP
« on: June 18, 2021, 02:56:41 PM »
I think I know the answer, but is there any way to collapse a locked in RRSP or combine locked in RRSPs when one is federally and one is provincially regulated?

I would like to simplify my financial holdings as I get older, but from what I have read, there is no way to mingle my personal RRSP, federally regulated locked in RRSP and provincially regulated RRSP.  Or RRIFs when I convert then.

I know that the locked in accounts have maximum withdrawal limits to 'protect' people that will pull out all the money and buy a car.....but, damn, I resent the nanny state mentality for those of us that just want to manage our money in a more stream lined approach.

Even pulling out the maximum allowed from the locked in RRIFs, I'll still be nearly 90 before I can close them.   

As I understand it, I can withdraw all funds from a locked RRIF if:
- I can claim financial hardship, with an income of less that ~$41K for the past 12 months
- the total value is less than 50% of the YMPE (yearly maximum pensionable earnings)
- I die, it unlocks for my spouse

Does anyone know if I can claim financial hardship if I just live off my TSFA for a year and thus have a low 'income'.  And could I claim financial hardship for both the federally and provincially regulated L-RRIFs?

I suppose I could just buy annuities when I'm 80 so I don't need to worry about it. 

Talk about a first world problem - I have too many retirement funds to hoo for me.


  • Walrus Stache
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  • Posts: 6992
  • Location: BC
Re: locked in RRSP
« Reply #1 on: July 07, 2021, 02:15:51 PM »
Yes, I have claimed the financial hardship in the past.  You fill in the form and the bank processes it.
Because the bank processes it, there are not many checks on what exactly your income is, AND actually, that current year you are mid-year for income so how can they check anyway?

The amount you receive tops you up to the maximum amount (in your case $41k?).  You withdraw more than that amount to account for taxes being paid.

You can also take out money in BC to pay your rental deposit, or medical, or for life medical condition, or if you emmigrate.

Some provincial rules let your close out a small LIRA even if you have a second one that would put you above the cap for small accounts, some provinces state about the total in all the LIRAs, and the amount of the cap increases after a set age (50, 55, 65, etc depending on province).

So - find a way to get your net income below the cap (TFSA?), and draw it down over a couple of years until you can close it out.  Also, put your more conservative investments for your chosen AA there so it doesn't grow as fast.    Note, you can also create a LIRA early and draw out $2k/yr for the pension tax credit (income tax free in other words), so this could be good for you.

Yes you can claim financial hardship and draw from both, but technically, to one total limit?  But I don't think there is any cross-checking in place, really.

Annunities could pay out a lot by the time you are 80?  They can't always be a low interest option, right?  I think they are like 1.3% right now.