Changes To The Rules For Ontario Locked-In Accounts - O. Reg. 239/09

On June 19, 2009, O. Reg. 239/09  under the Pension Benefits Act was filed. The Regulation makes numerous important changes to the rules governing locked-in accounts. Locked-in accounts include Locked-In Retirement Accounts (LIRAs), Old Life Income Funds (Old LIFs), New Life Income Funds (New LIFs) and Locked-In Retirement Income Funds (LRIFs). The following points summarize the key changes to the rules, indicate when these changes come into effect, and provide answers to some of the questions that are likely to arise as a result of these changes.

• From January 1, 2011 to April 30, 2012, owners of Old LIFs and LRIFs will have a one-time opportunity to withdraw in cash or transfer to an RRSP or RRIF up to 50% of the total market value of the assets of the fund.
 
• From January 1, 2010 to December 31, 2010, owners of New LIFs will have a one-time opportunity to withdraw in cash or transfer to an RRSP or RRIF an additional 25% of the total market value of the assets of the fund that were transferred into their New LIF account on or before December 31, 2009.
 
• After December 31, 2009, anyone who purchases a New LIF will have a one-time opportunity to withdraw in cash or transfer to an RRSP or RRIF up to 50% of the total market value of the assets of the fund.
 
• On or before September 30, 2010, financial institutions are required to give notice of these and other related changes to owners of Old LIFs and LRIFs.
 
• On or before January 1, 2010, financial institutions are required to give notice of these and other related changes to owners of New LIFs.
 
• As of January 1, 2011, all of the rules that govern locked-in retirement accounts (LIRAs) are consolidated into Schedule 3 under the Regulation.

• New LIF owners can withdraw or transfer an additional 25% of the assets that were transferred into their account on or before December 31, 2009.
 
• Anyone who purchases a New LIF can withdraw or transfer up to 50% of the assets.

• Owners of Old LIFs or LRIFs can apply to withdraw or transfer 50% of the assets in their account.
 
• Owners of New LIFs will no longer be able to withdraw or transfer an additional 25% of the assets that were transferred into their account on or before December 31, 2009.
 
• The rules for determining the maximum annual income payment from an Old LIF or an LRIF will become standardized with the rules under a New LIF: the greater of the investment earnings of the fund in the previous year, or the amount that would be paid using the LIF formula in the regulations.
 
• Owners of Old LIFs and LRIFs will no longer be able to transfer assets from those accounts to a locked-in retirement account (LIRA).
 
• The new Schedule 3 which sets out the LIRA rules comes into effect.

For more information, see New Rules for Ontario Locked-in Accounts that come into effect on January 1, 2011.

• Owners of Old LIFs or LRIFs will no longer be able to withdraw or transfer 50% of the assets in their account.