Q: I have two locked in LIRAs with my bank—one for $36,000 and another one for $18,000, each from past employers. I live in Nova Scotia and am 46 years old. I have been unemployed for two years now and am having trouble meeting my mortgage payments. Is there any way to access this money before age 55 and if so, what would be my best strategy?
—Blair Rudderham, N.S.
A: A Locked-In Retirement Account (LIRA) is an RSP with restrictions on accessing the funds before age 55. There are financial hardship provisions to access these funds early:
low expected income
payment of first and last months’ rent
arrears of rent or debt secured on a principal residence (such as a mortgage)
medical expenses
Blair would be eligible to unlock up to $36,600 in 2016 depending on his outlook for earning income. He would apply directly to the financial institution that is holding the LIRA(s). An application form can be found at Financial Services Commission of Ontario.
Once approved, applicable tax will be withheld as if Blair withdrew funds from an RSP. Blair cannot re-apply for further fund access until the following year.
Hopefully, Blair’s outlook for income will improve so he can meet his lifestyle needs, keep up with mortgage payments and recover the savings that was lost.
Ask an Expert: Leave your retirement question for Tom Feigs »
Tom Feigs is a fee-for-service financial planner, money coach and retirement planning expert based in Calgary, Alberta.
More questions answered:
Should I dip into my RRSP while on maternity leave? »
What’s the best month to retire? »
Do I qualify for the pension tax credit? »
The post What’s the best strategy to unlock my LIRA early? appeared first on MoneySense.