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By Allan Norman, MSc, CFP, CIM on November 27, 2025
Estimated reading time: 5 minutes

By Allan Norman, MSc, CFP, CIM on November 27, 2025
Estimated reading time: 5 minutes

Under what circumstances can you obtain the greatest tax savings on this $2,000 credit?

I liked your coverage of RRIF taxation. I would like to see more information on LIF taxation. More precisely, on the following scenario: Individuals do not get the $2,000 tax credit for RRIF withdrawals before age 65. Did I read properly that for LIF withdrawals the $2,000 tax credit applies to anyone, irrespective of age? Meaning under 65? Should a LIRA be moved to a LIF when the expected minimum withdrawal would be under that threshold? Should LIF withdrawals be recommended for anyone under 65 as a tax strategy? Looking forward to reading your answer.

—Sylvain Bussiere

Hi Sylvain, unfortunately your interpretation is not correct. Converting your locked-in retirement account (LIRA) to a life income fund (LIF) before the year you turn 65 does not qualify you for the $2,000 pension tax credit. Even converting your LIF to an annuity doesn’t qualify you for the pension tax credit at age 65.

Having said that, this tax credit is not a big deal for most people, and in some cases, you will be better off not converting an RRSP or LIRA to a RRIF or LIF to qualify for the credit.

In 2025, the maximum federal tax savings is $290 (for my calculations, read on). There is a little more in savings when you apply the provincial credit, which varies by province. In Ontario, the additional tax saving is $89. That........

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