DEFINITION of 'Life Income Fund - LIF'

In Canada, a type of registered retirement income fund that is used to hold pension funds, and eventually payout retirement income. The life income fund (LIF) cannot be withdrawn in a lump sum; rather, owners must use the fund in a manner that supports retirement income for their lifetime. Each year's Income Tax Act specifies the minimum and maximum withdrawal amounts for LIF owners, which takes into consideration the LIF fund balance and the owner's annuity factor.

BREAKING DOWN 'Life Income Fund - LIF'

LIF owners are not required to purchase a life annuity, buy may choose to do so at any age. A LIF owner may also choose to transfer funds to another LIF, a locked-in retirement income fund (LRIF) or in certain cases to a locked-in retirement account (LIRA). The financial institution from which the LIF is issued must provide an annual statement to the LIF owner. Based on the annual statement, the LIF owner must specify at the beginning of each fiscal year the amount of income he or she would like to withdraw. This must be within a defined range to ensure the account holds enough funds to provide lifetime income for the LIF owner.

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RELATED FAQS
  1. Who can transfer funds to a Locked-in Retirement Account (LIRA)?

    Transferring funds into a LIRA account can be initiated by owners of defined contribution plans or defined pension plans ... Read Answer >>
  2. Where can I transfer money from a Locked-in Retirement Account (LIRA) to?

    Transfers of money from a LIRA can be made to another LIRA account, to an LIF account or to an insurance company in order ... Read Answer >>
  3. What are the restrictions for withdrawing my Locked-in Retirement Account (LIRA) ...

    Learn about Locked-in Retirement Funds and options available for receiving retirement income. Explore circumstances when ... Read Answer >>
  4. What happens to a Locked-In Retirement Account (LIRA) in the case of a divorce or ...

    Learn different options in cases of divorce where assets are held in Canadian Locked-In Retirement Accounts. Learn which ... Read Answer >>
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