Has anyone unlocked a LIRA?

[thatangela 134]

I worked for a college in Calgary for a couple of years and, since it's government funded, my pension account had to roll into a LIRA. I've read federal law allows the LIRA account holder to access the funds once non-residency is ascertained.

Has anyone done this and how did it go?

[Udella&Wiz 325]

I will be interested to hear - at the time I left in 2007, I was told there was no unlocking it...but I believe Canadian laws may have changed.

I imagine if unlocking is allowed you'd take an ugly tax hit and then possibly a tax hit depending on how much you would be bringing into the US. At the time I was told there is no direct transfer from your Canadian retirement fund into a US 401K. Obviously the Cdn government wants their cut since this was income earned in Canada. At best I think it would go into a post tax retirement fund here in the US.

If you're young I doubt its an issue but it depends on how much you stand to lose

I worked for a college in Calgary for a couple of years and, since it's government funded, my pension account had to roll into a LIRA. I've read federal law allows the LIRA account holder to access the funds once non-residency is ascertained.

Has anyone done this and how did it go?

[thatangela 134]

I will be interested to hear - at the time I left in 2007, I was told there was no unlocking it...but I believe Canadian laws may have changed.

I imagine if unlocking is allowed you'd take an ugly tax hit and then possibly a tax hit depending on how much you would be bringing into the US. At the time I was told there is no direct transfer from your Canadian retirement fund into a US 401K. Obviously the Cdn government wants their cut since this was income earned in Canada. At best I think it would go into a post tax retirement fund here in the US.

If you're young I doubt its an issue but it depends on how much you stand to lose

I like to think I'm young, although my birth certificate tells a different story.

Yes, federal law changed in 2008 to allow for access to your LIRA. There will be a tax hit but if I can get through the hoop-jumping, I don't have to roll it into another retirement fund. I can have the money deposited into any bank account.

Then I can use the money to close off my debt here in Canada (or at least pay back my fiance for it).

[Udella&Wiz 325]

Ah, ok - I guess the question is how much tax is taken. If you use it to for something other than retirement afterwards you don;t have too many worries. For me, it would mean I would lose a portion of 10 yrs worth of retirement savings to taxes (I was 37 when I left).

Would you have to file an income tax return for the year you unlocked your LIRA? I haven't needed to file a Cdn tax return since I left.

I can't decide if it's worth it or not. If I put it in post tax here in the US

[Flames9_RN 358]

better luck here: http://forums.serbinski.com/viewforum.php?f=2

[Udella&Wiz 325]

This may help as well http://www.fsco.gov.on.ca/en/pensions/lockedin/Pages/nonhardshipunlocking.aspx

See the comment entitled:

• you are a non-resident of Canada and 24 months have passed since the date of your departure from Canada - Form 5

[thatangela 134]

I didn't see any time requirement on anything I read about an Alberta LIRA.

This thread was helpful,so thanks Flames:

http://forums.serbinski.com/viewtopic.php?t=4332&highlight=lira

First, you need to habve been reporting the existence of the LIRA to IRS every year on form 8891 and FBAR. I hope you have been doing this. If not you need to back-file these for each year you filed a 1040.

Only ater that you can approach your financial instittion and request that you be allowed to break the LIRA because you are non-resisnrt. You will need to fill an NR73 and submit this to CRA, and wait for their determination that indeed you are non-resident. Once this is done, bank will allow you to cash out LIRA; you will pay 15% flat tax withheld.

You will then report the entire income on a final 8891 and your 1040 and use the 25% tax as a foreign tax credit on form 1116.

[Flames9_RN 358]

Every once in awhile I'm useful.....not very often though,lol

[cloudy 6]

Thanks for alerting me to the fact that this was even a possibility!! I have a smallish LIRA and I thought that money was just going to be socked away forever (or at least 30+ years) in a country I'll no longer live in and I didn't know if I'd ever end up getting it. This is very good news.