iAtoday

Effective March 1, 2021, unlocking withdrawals for a LIRA or a LIF subject to the Newfoundland and Labrador (NL) Pension Benefits Act, 1997 and its Regulations is now possible for non-residents or due to financial hardship.

1. Withdrawals for a non-resident of Canada

LIF and LIRA owners (the “Owner”) or their surviving spouse may withdraw the entire value of the LIF or LIRA account if this person has been a non-resident of Canada for at least two consecutive years and provides the statutory declaration. The owner’s spouse consent is also required in Form 10.

2. Withdrawals due to financial hardship

The Owner can apply once per calendar year under each following category:

• Low expected income
• Inability to pay for medical costs or disability-related expenses
• Threat of foreclosure due to inability to make monthly mortgage payment
• Threat of eviction due to an inability to make rent payment
• Inability to make first month’s rent or security deposit when trying to rent accommodations

Financial hardship unlocking cannot be done directly from a pension plan.

Required documents:

• Form 9 – Application must be completed and provided to iA Financial Group within 90 days of signature (a separate form is required for each category).
• If the Owner is a former member of a pension plan and has a spouse (including a cohabiting partner), the spouse’s consent is required in Form 9.
• Documents to support the withdrawal amount requested.

Maximum amount that can be unlocked for low income:

• Unlocking is permitted if the Owner is expecting to experience a period of low income based on a formula determined to be 66.66% of yearly maximum pensionable earnings (YMPE).
• The maximum amount that can be withdrawn is up to 50% of the YMPE, or $30,800 in 2021 (as the YMPE is $61,600), plus the withholding tax.
• This means that if the expected income before taxes for the next 12 months following the date Form 9 is signed is:

• $0, a withdrawal of up to 50% of the YMPE is permitted, or $30,800 in 2021;
• 66.66% of the YMPE ($41,063 for 2021) or higher, the limit has been reached for unlocking and the withdrawal is therefore not available.

Maximum amount that can be unlocked for all other circumstances:

• The amount required to pay expenses, mortgage arrears and additional fees being charged by the lender, rental arrears, the first month’s rent or a security deposit, plus the withholding tax. 
• The LIRA and LIF can be unlocked up to 100%, provided the documents support it.
• >Withdrawal transaction fees from the LIRA and LIF issuer are not included in the net amount available to be unlocked. This means that the owner cannot unlock additional amounts to cover these fees.

The amount withdrawn may be paid in cash or transferred to an RRSP or a RRIF.

For more information, consult FAQ on th NL website.