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Life Income Funds (LIFs)
When the time comes to turn locked-in funds into income, consider a Life Income Fund (LIF). It is one of the two options available to Registered Pension Plan (RPP) holders for income payout. The other option is a Locked-In Retirement Income Fund (LRIF).
A LIF is similar to a Registered Retirement Income Fund (RRIF), which is used as a flexible payout option for Registered Retirement Savings Plan (RRSP) holders. A LIF converts retirement savings into regular income payments. It also allows individuals to determine the level and frequency of their income stream and how it is invested. However, a LIF restricts the maximum amount a person can withdraw in a year, in addition to the minimum payment requirement.
A LIF usually unlocks Registered Pension Plan funds after age 55, allowing the holder to receive a stream of income until age 90. At this time, the remaining savings must be used to purchase a life annuity. This restriction ensures a pension income for life. Quebec residents may either keep their LIF for life or purchase an annuity.
LIFs available through Renaissance Investments offer a wide investment choice, providing investors with the flexibility to move from one option to another with ease.