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 The life income fund (LIF) cannot be withdrawn in a lump sum; rather, owners must use the fund in a manner that supports retirement income for their lifetime.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.

RELATED TERMS
  1. Locked-In Retirement Account - ...

    A type of registered retirement savings alternative that locks ...
  2. Individual Retirement Annuity

    A retirement investment vehicle that is structured similarly ...
  3. 412(i) Plan

    A defined-benefit pension plan designed for small business owners ...
  4. Income

    Income is money that an individual or business receives on a ...
  5. Term Certain Method

    A method of calculating minimum distributions from a retirement ...
  6. Current Income

    The investment objective for a moderately conservative portfolio ...
Related Articles
  1. Small Business

    Keeping Your Business Investment on Track

    Business owners need to track business value and performance like any other investment.
  2. Retirement

    Weave Your Own Retirement Safety Net

    Build savings to support yourself in case pension plans and Social Security fall through.
  3. Retirement

    Retirement Tips for Government Workers

    Discover retirement tips for government workers such as what types of funds to choose, different types of plans, and at what age to retire.
  4. Retirement

    4 Steps to Make Retirement Income Last

    Use these four steps to ensure your income will last you through retirement.
  5. Financial Advisor

    How to Solve the Retirement Equation

    Make sure you are prepared for retirement by solving the equation of income and expenses.
  6. Investing

    The Pros And Cons Of Target-Date Funds

    These accounts will take charge of your retirement savings, but should you let them?
  7. Retirement

    Lifetime Income or Lump Sum Payment: Which Is Best?

    If your pension is being eliminated, should you take the lump sum or lifetime income option?
  8. Retirement

    Retirement Plans From Around The World

    How does the rest of the world stack up against the U.S. when it comes to planning and saving for retirement?
  9. Insurance

    Using Insurance in a Business Succession Plan

    How to use life and disability insurance to help fund a business succession or buyout plan.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. What are the main differences between a provident fund and a pension fund?

    Learn about some of the primary differences between the benefits of provident funds and pension funds, two types of retirement ... Read Answer >>
  4. How are Registered Retirement Saving Plans (RRSPs) taxed?

    Learn about registered retirement saving plans, and find out how the Government of Canada provides tax benefits for those ... Read Answer >>
Hot Definitions
  1. Retirement Planning

    Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve ...
  2. Drawdown

    The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted ...
  3. Inverse Transaction

    A transaction that can cancel out a forward contract that has the same value date.
  4. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  5. Solvency

    The ability of a company to meet its long-term financial obligations. Solvency is essential to staying in business, but a ...
  6. Dilution

    A reduction in the ownership percentage of a share of stock caused by the issuance of new stock. Dilution can also occur ...
Trading Center