A Registered Retirement Income Fund (RRIF) and a Life Income Fund (LIF) can both hold investments and provide taxable retirement income. The major difference is where the money comes from and how freely you can withdraw it. A regular RRIF generally contains retirement savings that are not locked in. A LIF holds locked-in pension money and is subject to pension legislation in addition to federal income-tax rules. As a result, a LIF normally imposes both a minimum and a maximum annual withdrawal, while a regular RRIF has a minimum but no comparable legislated maximum.
RRIF vs. LIF at a Glance
| Feature | RRIF | LIF |
|---|---|---|
| Main source of money | Usually RRSP or other eligible registered funds | Locked-in pension funds |
| Locked in | Generally no | Yes, subject to permitted unlocking rules |
| Annual minimum withdrawal | Yes | Yes |
| Annual maximum withdrawal | No general RRIF maximum | Yes |
| Can you withdraw the entire balance? | Generally yes | Usually not unless an unlocking rule permits it |
| Main legislation | Federal Income Tax Act | Federal tax rules plus applicable pension legislation |
| Investment growth inside account | Tax-deferred | Tax-deferred |
| Withdrawals | Generally taxable | Generally taxable |
| Rules identical across Canada | Federal RRIF rules generally apply | No, pension jurisdiction matters |
A LIF is essentially a type of locked-in RRIF. Federal tax rules still apply to it, but the pension legislation governing the locked-in money adds restrictions that a standard RRIF does not have.
Where the Money in a RRIF and LIF Comes From
A RRIF commonly receives money transferred from an RRSP when someone wants to begin drawing retirement income. An RRSP must mature by the end of the year its annuitant turns 71, and transferring it to a RRIF is one of the available options. The basic RRIF structure is designed to let the remaining investments stay registered while minimum withdrawals are paid each year.
A LIF usually traces back to an employer pension plan. For example, someone who leaves an employer may transfer eligible pension value to a Locked-in Retirement Account (LIRA). When the applicable pension rules allow retirement income to begin, that locked-in money can be moved to a LIF. Pension money transferred directly from a registered pension plan may also be eligible for a LIF in some circumstances.
The source of the money explains most of the later differences. Pension legislation generally protects locked-in funds for retirement rather than allowing unrestricted access to the entire account.
RRIFs Have No General Maximum Withdrawal
Once the required annual minimum has been satisfied, a regular RRIF does not impose a federal maximum on how much you can take out. You can withdraw more than the RRIF minimum and, if necessary, withdraw the entire account.
The withdrawal is generally taxable, and amounts above the required minimum can be subject to RRIF withholding tax. Taking a large amount can therefore produce a substantial taxable-income increase even though the account itself does not prevent the withdrawal.
A LIF works differently because preserving pension money for retirement is part of its design. Federal tax rules establish the minimum withdrawal, while the pension legislation governing the account can restrict the maximum amount available during the year.
A LIF Has a Maximum Annual Withdrawal
The maximum is one of the most important practical differences between a RRIF and a LIF. You generally cannot decide to empty a LIF whenever you want, even if you are prepared to pay the resulting income tax.
The exact maximum cannot be stated as one Canada-wide percentage because LIF rules depend on the pension jurisdiction governing the money. Provincial pension legislation can apply, while federally regulated pension money follows federal pension standards. The applicable jurisdiction determines the maximum-payment formula and many of the account’s other restrictions.
For example, Manitoba describes its 2026 LIF as a RRIF subject to the province’s Pension Benefits Act and regulations. Payments must meet the federal Income Tax Act minimum while remaining within the maximum permitted under Manitoba pension rules. Ontario likewise defines a LIF as a form of RRIF that holds pension money and is subject to minimum and maximum annual income limits.
This provincial or federal layer is why we would not use a generic Canadian LIF maximum without first identifying which pension legislation governs the account.
Some LIF Money Can Be Unlocked
“Locked in” does not mean there are no circumstances in which the restrictions can be removed. Pension jurisdictions provide their own unlocking rules, and those rules can differ considerably.
Ontario, for example, permits unlocking in specified 2026 circumstances that can include financial hardship, shortened life expectancy, sufficiently small locked-in balances, non-residency and a limited opportunity to withdraw or transfer part of the money from certain LIFs. Each category has its own conditions.
Manitoba has a different framework. Someone who is at least 55 can make a once-in-a-lifetime transfer of up to 50% of qualifying Manitoba locked-in money to a prescribed RRIF. Money transferred to that prescribed RRIF is no longer locked in.
These examples should not be applied automatically to a LIF governed by another jurisdiction. The pension legislation attached to the original pension money determines which unlocking provisions are available.
RRIF and LIF Minimum Withdrawals Work Similarly
Both accounts must satisfy the annual minimum required under the federal Income Tax Act. The calculation is generally based on the account’s value at the beginning of the year and the prescribed factor associated with the relevant age.
That means a LIF does not replace the federal minimum with only a pension-law maximum. It operates between two boundaries: the required federal minimum and the maximum permitted under the applicable pension legislation.
A regular RRIF only has the first of those boundaries. The RRIF minimum withdrawal rules determine how much must come out, but there is no corresponding federal RRIF rule requiring you to stay below a particular annual maximum.
RRIFs Give You More Access to Your Money
For someone comparing the two account structures, withdrawal flexibility is the clearest practical difference. A RRIF lets you decide how much to take beyond the minimum. A LIF restricts that decision because the account still carries pension locking-in requirements.
That does not make one account universally preferable. In many cases, the choice is not simply RRIF versus LIF in the first place. The type of money determines which account can legally receive it. Ordinary RRSP savings can be moved into a RRIF, while locked-in pension assets generally have to remain within an arrangement permitted by the pension legislation unless an unlocking provision applies.
We think this is the more useful way to view the comparison. A LIF is not merely a less flexible RRIF offered as an alternative product. It exists because the money inside it is subject to pension restrictions.
Other Questions About RRIFs and LIFs
Can you transfer a LIF directly to a regular RRIF?
Not simply because you want fewer withdrawal restrictions. Locked-in money must continue to comply with the pension legislation governing it unless a transfer or unlocking provision permits otherwise. Some jurisdictions provide specific opportunities to move eligible amounts into an unlocked RRIF.
Can you have both a RRIF and a LIF?
You can hold both when you have appropriate funds for each account. For example, personal RRSP savings may fund a RRIF while locked-in assets originating from an employer pension remain in a LIF.
Are LIF withdrawals taxable?
Payments from a LIF are generally taxable retirement income. A LIF satisfies the federal requirements for a RRIF while also carrying the additional pension-law restrictions that apply to the locked-in assets.
Is a LIF the same as a LIRA?
A LIF and a LIRA serve different stages. A LIRA is the locked-in counterpart of an RRSP, primarily holding pension money before retirement income begins. A LIF is a locked-in form of RRIF designed to pay retirement income while retaining the applicable pension restrictions.
