Locked-in RRSP

It’s a registered plan established to receive funds transferred from a registered pension plan provided that it serves only to generate only retirement income. These funds are usually “locked,” meaning they can’t be touched until retirement.

The locked-in RRSP differs from a LIRA in that the funds transferred to it must come from a pension plan registered with the federal government.

In due course, the funds in the locked-in RRSP must be transferred to a life income fund (LIF) or be used to purchase a life annuity from an insurance company.

The advantages of a locked-in RRSP

The locked-in RRSP allows the account holder to defer taxation of investment earnings until the accumulated funds are withdrawn for the sole purpose of providing lifetime income in retirement.