Life Income Funds (LIFs)

Federal or Provincial Jurisdiction?

To determine the jurisdiction applicable to pension funds, it is first necessary to determine whether the main business of the company was under federal jurisdiction. If this is not the case, the pension plan is under provincial jurisdiction. The fields of activities of federal jurisdiction are essentially:

• Banks;
• Navigation and transport by interprovincial and international water;
• Interprovincial or international transportation;
• Interprovincial or international railways;
• Air transport;
• Atomic energy;
• Telecommunications (radio, television, cable, Internet services, telephone services);
• Postal and courier services;
• Pipelines extending beyond the limits of the province;
• Off-coast mineral exploration;
• Grain elevators, feed mills and mills;
• Federal departments and agencies.

Knowing that the pension plan is under provincial jurisdiction, it must then determine which provincial law applies. It is according to the location of employment of the individual in the pension plan that we can tell which province's law applies to their rights. Thus, the provincial law applicable to a client's rights is not determined by plan or its place of registration, but according to the province where the participant worked when they ceased to participate in their retirement plan.

Authorized Withdrawals

The law dictates the minimum and maximum amounts you may withdraw each year. The maximum withdrawal calculations depend on whether your LIF falls under its jurisdiction.

The LIF is very flexible: you maintain total control of your capital. You select the amount of the payments you will receive and you can change it at any time (subject to the legislated annual maximum). You can also make additional withdrawals, which lets you carry out your retirement plans and vacations, help your children financially or plan for contingency purposes.

Only the LIF gives you total control over your capital.

Death

Upon your death, the balance of your LIF is paid to your spouse or, if they renounce it or in their absence, to your heirs. If it is paid to your spouse, in the case of LIF under Quebec or Ontario jurisdiction, they can transfer it to their own RRSP or RRIF tax-free. However, in the case of a federal LIF, the funds paid to the spouse remain locked and must be transferred to a locked-in RRSP or LIF in the name of the spouse.

Eligible Investments

Several investments are LIF-eligible. Select the investments that best suit your profile. However, you must make sure that your LIF/LRIF portfolio includes at least one investment, which will allow you to make regular withdrawals and, if required, additional withdrawals.

Desjardins Online Brokerage Self-Directed LIF

You may include almost anything: Savings instruments, treasury bills, bonds, mutual funds, Canadian or American stocks (see a complete list of eligible investments).