LIRAs unchained

Annuities aren't the only withdrawal options for locked-in retirement accounts.

Gail Bebee 28 January, 2016 | 6:00PM
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Note: This article is part of Morningstar's January 2016 Five keys to retirement investing special report.

The money in your workplace registered pension plan belongs to you. However, it is normally not accessible until retirement. Even if you lose or quit your job, most if not all of the cash will be out of reach. Instead, the money stays in your former employer's pension plan and you will receive a specified pension when you reach retirement age.

Alternatively, you can choose to have the commuted value (the present value of the pension entitlement earned during your employment) transferred into a locked-in retirement account (LIRA). No further contributions can be made to the LIRA. Generally, the money must remain in the LIRA, where it grows tax-free. When you reach retirement age as defined by regulation, or by age 71 at the latest, you convert the LIRA funds into a pension-like income.

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About Author

Gail Bebee

Gail Bebee  Gail Bebee is an independent personal finance speaker, teacher and the author of No Hype--The Straight Goods on Investing Your Money. She can be reached at gbebee@gailbebee.com; her website is www.gailbebee.com.

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