How to free up some of that pension money
Do you have a locked-in RRSP left over from an old employer-sponsored pension plans?
Because the withdrawal rules are so stringent and the amount often small, money like this is sometimes put away and forgotten about. Now, however, it’s possible to get at that cash, under certain circumstances.
But it’s not always easy.
Each provincial pension plan has different rules and federal pensions are also distinct, so check with someone in your province to see what works. Recent rule changes still only affect about 10 per cent of Canadian pension plans that are federally regulated, although most provinces have already moved to increase flexibility in their locked-in savings plans.
If you're 55 years of age or older and your locked-in assets are less than half of the yearly maximum pensionable earnings (YMPE) — $23,150 in 2009 — for example, you can legitimately unlock up to 50 per cent of your locked-in assets, or convert them to another tax-sheltered registered account, with no withdrawal limits.
There are also new provisions available for smaller, locked-in account balances, if you have significant medical expenses or if your annual income is likely to be very low.As well, anyone, regardless of age, may withdraw cash, up to 50 per cent of YMPE, from any combination of locked-in accounts (all withdrawals need to be made within 30 days), if you expect to spend more than 20 per cent of your income in any given calendar year for medical treatment, if your life expectancy is reduced or if you plan to leave Canada permanently.