Hi All; Here is some information on the Unlocking of your 25% in January. We Will still be going after the 100%. We are just letting the party's reorganize after the election. Keep encouraging people to sign the online petition ( I will be mailing it in again ) and also Please keep mailing the Premier and MPP's and our soon to be new Finance Minister.
Take Care , Regards Bill C Changes
To The Rules For Ontario Locked-In Accounts On July 27, 2007, O. Reg. 416/07 under the Pension Benefits Act was filed.
The Regulation makes numerous important changes to the rules governing locked-in accounts. The following are answers to some of the questions that are likely to arise as a result of these changes.
For ease of reference, the questions are grouped under the following headings: Overview of changes
Q: What are the key changes to the locked-in account rules?
A: The key changes are: A new Life Income Fund (the "New LIF") is introduced effective January 1, 2008. It will provide more flexible payments and allow owners a one-time opportunity to withdraw up to 25% of the amount in the New LIF.
An option to directly transfer money from a locked-in account to an unlocked vehicle, a registered retirement savings plan ("RRSP") or a registered retirement income fund ("RRIF") is provided in certain situations.
Effective January 1, 2008, owners of locked-in accounts who are non-residents of Canada, as determined by the Canada Revenue Agency ("CRA") for the purposes of the federal Income Tax Act, may apply two years after departure from Canada to withdraw the money in their accounts.
The current Life Income Fund (the "Old LIF") and the Locked-In Retirement Income Fund ("LRIF") will not be available for purchase after December 31, 2008.
Q: Which changes come into effect as of July 27, 2007?
A: Owners of Old LIFs are no longer required to purchase an annuity by the end of the year in which they reach 80 years of age.
Owners of Old LIFs will be able to continue their LIF after they reach 80 years of age. Owners of Locked-In Retirement Accounts ("LIRAs") can now keep the money in their LIRA until the end of the year in which they reach the age of 71 rather than the end of year in which they reach the age of 69.
This reflects a change made to the federal Income Tax Act.
Owners of Old LIFs and LRIFs can transfer the money in their accounts to a LIRA prior to the end of the year in which they reach the age of 71.
Changes that affect the Old LIF
Q: I currently own an Old LIF. Do I have to make any changes to it to comply with the new rules?
A: There is no need to make any immediate changes to your LIF as a result of the new rules. However, since an annuity purchase is no longer required, you can continue your LIF past age 80 and you can transfer the money to a LIRA until the end of the year in which you reach age 71.
Q: Can I still buy an annuity with money in my Old LIF?
A: Yes, at any age.
Q: Will there be any effect on the amount of the annual income payment from the Old LIF in 2007?
A: No. The minimum and maximum amounts for the annual income payment for 2007 were established as of January 1, 2007 and will not change.
Q: Will the new rules change the formula for determining the minimum and maximum amount of the annual income payment for the 2008 year?
A: No. The minimum and maximum for 2008 will be calculated using the same formula as in 2007.
Q: If I want to transfer money out of my Old LIF, to which vehicles can I make the transfer?
A: You can transfer money in an Old LIF to a LIRA until the year in which you reach age 71, to another Old LIF or to an LRIF before December 31, 2008, or for the purchase of an annuity.
After January 1, 2008, you will be able to transfer the money to a New LIF as soon as financial institutions make the New LIF available.
Q: What are the differences between the Old LIF and the New LIF?
A: The New LIF will have another option for determining the maximum annual income payments and you will have a time limited option to withdraw or transfer to an RRSP or RRIF 25% of the value of the funds transferred into a New LIF.
Q: Can I withdraw or transfer 25% of the funds from my Old LIF?
A: No. The 25% withdrawal or transfer option is only available under the New LIF.
Q: What happens if I die while I still have my Old LIF?
A: Your surviving spouse is entitled to the full amount in your Old LIF in an unlocked lump sum as of the date of death.
If you do not have a surviving spouse on the date of your death, your named beneficiary, or if there is none, your estate, is entitled to receive the amount in your Old LIF.
Effective January 1, 2008, your spouse will have the option of transferring the full amount to his or her own RRSP or RRIF where permitted by the federal Income Tax Act.
Changes that affect the Locked-In Retirement Income Fund (LRIF)
Q: I currently own an LRIF. Do I have to make any changes to it to comply with the new rules? What happens if I do nothing?
A: There is no need to make any changes to your LRIF as a result of the new rules.
Q: Will there be any effect on the amount of the annual income payment from the LRIF in 2007?
A: No. The minimum and maximum amounts for the LRIF in 2007 were based on the amount earned by the LRIF in the previous fiscal year and will not change.
Q: Will the new rules change the formula for determining the minimum and maximum amount of the annual income payment for 2008?
A: The minimum and maximum for 2008 will be calculated using the same formula as in 2007.
Q: If I want to transfer money out of my LRIF, to which vehicles can I make the transfer?
A: You can transfer money in an LRIF to a LIRA until the end of the year in which you reach age 71, to an Old LIF or another LRIF before December 31, 2008, or for the purchase of an annuity.
After January 1, 2008, you will be able to transfer the money to a New LIF as soon as financial institutions make the new LIF available.
Q: What are the differences between the LRIF and the New LIF?
A: You will be able to withdraw or transfer to an RRSP or RRIF 25% of the value of the funds transferred into a New LIF and one of the methods by which to determine the maximum annual income payment (the cumulative investment earnings since the inception of the LRIF) will be replaced by the maximum amount under the LIF formula.
If you transfer from an LRIF to a New LIF, you will no longer be able to carry forward the unused portion of your LRIF.
If you do not use up the unused portion of your annual income payment in a fiscal year before your LRIF becomes a New LIF, you will no longer be able to add the unused portion to the maximum amount you can withdraw in future years.
Q: What happens if I die while I still have my LRIF?
A: Your surviving spouse is entitled to the full amount in your LRIF in an unlocked lump sum as of the date of death.
If you do not have a surviving spouse on the date of your death, your named beneficiary, or if there is none, your estate, is entitled to receive the amount in your LRIF.
Effective January 1, 2008, your spouse will have the option of transferring the full amount to his or her own RRSP or RRIF where permitted by the federal Income Tax Act. The New LIF
Q: When will the New LIF be available?
A: The regulation allowing for the New LIF will come into effect on January 1, 2008. After that date, financial institutions will be able to make the New LIF available to consumers once they get approval for their New LIF contract from the Canada Revenue Agency.
Q: Who will be able to purchase the New LIF?
A: An owner of an Old LIF, an LRIF, a LIRA, or a member of a registered pension plan who has terminated employment and is entitled to an immediate pension, or the member's former spouse, may transfer their commuted value to a new LIF.
Q: What are the significant features of the New LIF?
A: First, you will be able to keep the New LIF past age 80.
If you took the maximum income payment each year, your New LIF would be exhausted by age 90, but if there are assets remaining in the New LIF at age 90, you may continue to keep it and withdraw income from it in subsequent years.
Second, the maximum annual income payment will be the greater of the amount you could be paid under the formula in the New LIF (which is the same as the formula in the Old LIF) or the amount of investment earnings of the New LIF in the previous year.
Third, you will be able to withdraw or transfer to an RRSP or RRIF up to 25% of the amount transferred into the New LIF.
Q: How will the 25% withdrawal work?
A: Owners of a New LIF will have the one-time option of withdrawing or transferring to an RRSP or RRIF an amount up to 25% of the total market value of the assets transferred into the New LIF.
The transfer to a New LIF may be from an Old LIF, an LRIF, a LIRA, or from a registered pension plan when an individual who is entitled to an immediate pension terminates employment and is entitled to a transfer of his or her commuted value.
However, the 25% withdrawal will not apply when assets are transferred from one New LIF to another New LIF.
Q: When will I be able to make a 25% withdrawal? How do I apply, and to whom?
A: The owner of the New LIF will be able to apply to the financial institution that issued the New LIF within 60 days from the date the assets were transferred to the New LIF. Application must be made on a form that is issued by the Superintendent of Financial Services.
The form will be available in January 2008.
Q: What would happen if I failed to make the 25% withdrawal within 60 days? Is there another opportunity to make the 25% withdrawal?
A: If you do not apply to make the 25% withdrawal within 60 days of a transfer of funds into a New LIF, there will not be another opportunity to take advantage of this provision
