Locked-In Plans

What is Locked-In Plans?

Locked-in plans are when employers and employees’ vested contributions and interest are transferred into a Registered Retirement Savings Plan until the investor reaches a specific age (anywhere from age 50 to 70) depending on the pension legislation applicable to your plan.

Types of Locked-In Plans

Pre-retirement locked-in plans

Pre-retirement locked-in plans are considered RRSPs for federal income tax purposes. They include Locked-in Retirement Savings Plans (LRSPs), Restricted Locked-in Savings Plans (RLSPs) and Locked-in Retirement Accounts (LIRAs), depending on the applicable legislation. Currently, all LRSPs and RLSPs are subject to federal pension legislation.

Post-retirement locked-in plans

Similar to RRSPs, all pre-retirement locked-in plans must collapse and convert to a maturity option by the end of the year the plan holder turns age 71. The earliest age at which a pre-retirement locked-in plan can convert to a maturity option varies by pension legislation, with some having no age requirement at all. Four types of post-retirement locked-in plans are available.

Benefits of Locked-In Plans:

There are some benefits of Locked-in plans you should know about:

Moving vested amounts into a locked-in account provides diversification.
Full and direct access to a range of investment options that are typically more limited in a pension plan.
Helps avoid uncertainty with respect to retirement income from future instability or uncertainty of an employer.
Certain jurisdictions may permit a client to unlock a lump sum amount as a one-time event.
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