Is it possible to access a locked-in RRSP before age 55?

Jamie Golombek, vice-president of taxation and estate planning at AIM Trimark Investments, has the answer.

Jamie Golombek 16 February, 2003 | 2:00PM

Dear Expert:

Is it possible to access locked-in RRSPs before age 55? If I am not yet 55, what is the best way to access the money in a locked-in plan?

Expert Opinion:

The rules for locked-in RRSPs vary significantly from province to province. Generally, the earliest age in which one can begin receiving an income from a locked-in retirement account (LIRA) is either at age 55 or 10 years before the normal retirement age.

A lump sum withdrawal may, however, be allowed depending on the various provincial rules. In Ontario, for example, a lump sum withdrawal is permitted if the plan owner has a shortened life expectancy or experiences financial hardship. Each of these is defined in the provincial rules. There are also special rules for the withdrawal of small balances. For example, in Ontario, if the value of the individual's pension plan is less than 40% of his or her plan's Year's Maximum Pensionable Earnings (YMPE), or if the individual's annual pension benefit is less than 2% of YMPE, then the remaining balance may be withdrawn. Unfortunately, if these rules do not apply, there is no way to access the money in the locked-in plan prior to the age governed by the rules in your province.

To find out how much an RRSP contribution may save you, try Morningstar's RRSP Calculator.

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Jamie Golombek

Jamie Golombek