A locked-in retirement account (LIRA) is a Canadian registered retirement savings account into which pension funds are placed when an employee leaves the job to which his or her pension is attached. In the event that the account owner dies before reaching retirement age, the balance of the LIRA will be transferred to the owner’s spouse or common-law partner. If the owner does not have a spouse or common-law partner, the balance will instead go to either a designated beneficiary or, if there is no beneficiary, to the owner’s estate. Note that if you and your spouse or partner were living separate and apart due to a breakdown of the relationship prior to your death, your spouse or partner will not be eligible to receive the death benefit.
A LIRA is a Canadian registered retirement savings account that can provide a death benefit to a spouse, common-law partner, or designated beneficiary.
Your spouse, partner, or beneficiary may, either before or after your death, waive any rights to the death benefit. To do so, the person must first receive all prescribed information from the plan administrator. He or she must then sign a waiver and give it to the administrator of the account. In the event that he or she waives the right to the death benefit, the balance of the LIRA will instead go to your estate. As the owner of the LIRA, you and your spouse can revoke the death benefit waiver by signing a joint letter and filing it with the bank or financial institution that holds the LIRA.
Death benefits are not locked in and may be paid out as cash, or the balance may be transferred to the recipient’s own registered retirement savings plan or registered retirement income fund. In the event that the LIRA balance resulted from the pension benefit of someone other than the owner, the death benefit does not apply. The rules regarding LIRA death benefits vary minimally across Canada’s provinces and, in general, a LIRA cannot be transferred from the province in which it was registered.