Home Page Image
 
 
  


Unlock Your RRSP

 

Special Access

Effective May 1, 2000, amendments were made to the Pension Benefits Act to allow individuals who are experiencing Financial Hardship to apply for access to the funds in their Locked-In Retirement Account, Life Income Fund, or Locked-In Retirement Income Fund. Similar amendments were announced on May 8, 2008 for pensions governed by the Pension Benefits Standards Act (1985) – Federal. If your funds are still currently with your former employer’s pension plan, these funds must be transferred to a Locked-In Account before you can apply for Special Access.

FINANCIAL HARDSHIP

There are currently 6 conditions of financial hardship, these are:

  1. Low Income – In 2008, your expected income over the next 12 months will be less than $29,333.33 (for Ontario plans) and $33,675.00 (For Federal plans).
  2. Risk of Eviction from your home (Ontario plans).
  3. Risk of Eviction from your rented residence (Ontario plans).
  4. You need money in order to pay for First and Last months’ rental deposit on a residence you wish to rent (Ontario plans).
  5. You need money in order to pay for medical treatment for you, your spouse or same-sex partner, or any dependents of either of you (Ontario and Federal plans).
  6. You need money for residential renovations, alterations or construction to accommodate the use of a wheelchair, or other needs related to a disability or illness (Ontario and Federal plans).

You may qualify for more than 1 of the above conditions and therefore a combined amount would be calculated.

HEALTH and AGE/AMOUNT CONDITIONS

You may apply for special access under 4 additional circumstances.

  1. Shortened Life Expectancy – an individual who in the opinion of a physician licensed to practice medicine in a jurisdiction in Canada, faces a shortened life expectancy of 2 years or less, can apply for special access to withdraw some or all of their locked-in accounts.
  2. Age/Amount – individuals who are at least 55 years of age and the value of all assets held in Locked in accounts in 2008 is less than $17,960 (Ontario plans) and less than $22,675.00 (Federal Plans) will be allowed to withdraw all the money in their locked-in accounts. Also, individuals who are at least 55 years of age will be allowed to make a one-time withdrawal of up to 25% (Ontario plans) and 50% (Federal plans) of the value of their locked-in account.
  3. Excess Amount - Individuals who have transferred more money from their former pension plan into a locked-in account than is allowed under the Federal Income Tax Act will be allowed to withdraw the excess amount plus any investment earnings on the excess amount.
  4. Non-Residents – individuals who are non-residents of Canada for at least 2 calendar years will be allowed to redeem all the assets in their locked-in account.

Similar financial hardship conditions for special access are available for pensions that originated in Alberta and Saskatchewan and are governed by the Pension legislation of these provinces.

Important Points to Remember:

  1. Any money withdrawn from a locked-In account is no longer protected from creditors and may be seized by creditors.
  2. Money withdrawn from your Locked-In Account is taxable as Income and will be subject to normal withholding taxes.
  3. Withdrawing money from your locked-in account may affect your eligibility for certain government benefits such as social assistance.
  4. The purpose of all pension plans is to provide the participant of the plan with retirement income for life. Withdrawing funds even for current financial hardships may have negative impact and perhaps be detrimental to your retirement plan.