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How to Cash out a Canadian LIRA Account

How to Cash out a Canadian LIRA Account
Photo by John McArthur / Unsplash

I'm someone who prefers control of my money so this article was inspired during a period where I decided it was time to self-custody my LIRA funds.

If you moved out of Canada and are no longer a Canadian resident for tax purposes you may wonder what happens to your Locked-In Retirement Account (LIRA)?

Unlike a RRSP, a LIRA is designed to provide retirement income and is therefore “locked in” until certain conditions are met.

Why a LIRA Is “Locked In”

For most Canadians, a LIRA cannot be cashed out freely. However, there are limited exceptions that could allow you to unlock and withdraw funds, especially if you are living abroad. Common unlocking reasons include:

Non-Residency Unlocking – If you are a non-resident of Canada for at least 24 months and can provide written confirmation from the CRA, you may be eligible to unlock your LIRA.

Financial Hardship – Some provinces allow partial or full unlocking for emergencies such as medical costs or risk of foreclosure.

Shortened Life Expectancy – If you have a doctor-certified serious medical condition, early unlocking may be possible (varies by province).

Other Province-Specific Unlocks – Rules vary by province. Some allow age- or balance-based unlocking options. Check your provincial LIRA guidelines.

Step-by-Step Guide to Unlock Your LIRA as a (US Tax Resident POV)

Step 1 — Get Written CRA Confirmation of Non-Residency

To unlock your LIRA as a non-resident, you’ll usually need a written determination from the CRA confirming your non-resident status.

To request this, complete Form NR73: Determination of Residency Status (Leaving Canada).

📄 Download the form and details here

Filing this form doesn’t guarantee an outcome, and it’s not always mandatory, but many financial institutions require the CRA’s written opinion before releasing locked-in funds. Expect several weeks to months for processing (What did you really expect!?)

Step 2 — Update Your Account & Restrict Trading (Important for U.S. Expats)

Once you start claiming non-resident status, most Canadian institutions will restrict trading in equity holdings inside your LIRA.
You can usually still receive dividends, but many brokers will advise or require you to move to a cash position or hold “cash only” until your account status is fully updated and the funds are unlocked.

This helps you avoid unnecessary market risk and dividend withholding complexities while waiting for CRA confirmation and your 24-month eligibility mark.

During this step, you’ll also need to:

  • Re-sign your institution’s non-resident tax forms (like the W-9 and RC-518).
  • Provide your U.S. SSN and supporting documentation (e.g., your SSN card or a U.S. tax slip) so they can correctly tax-report your account.
  • Ensure your address, citizenship, and tax details are fully updated.

Step 3 — Write a Letter of Direction (LOD)

Once you’ve updated your account, gathered your SSN documentation, and approach the 24-month non-resident mark, you can prepare a Letter of Direction (LOD) — a straightforward written request to unlock your LIRA. This letter will be used by your institution to process the unlocking once they have received your CRA determination.

Here’s a simple LOD template you can copy and customize:

📄 Letter of Direction (LOD) Template for Unlocking a LIRA

Date: [Month Day, Year]
To: [Name of Financial Institution]
Address: [Their mailing address or your account branch]

Subject: Request to Unlock & Withdraw LIRA Funds – Non-Resident Status

Dear [Institution Name] Team,

I, [Your Full Name], holder of the LIRA account number [Your Account Number], am writing to request the unlocking and withdrawal of funds from my Locked-In Retirement Account in accordance with my non-resident status for tax purposes.

Please find below the necessary details for processing:

  • Account holder: [Your Full Name]
  • Account number: [Your LIRA account number]
  • Amount to withdraw: [Specify the total amount or percentage to unlock]
  • Currency: CAD (or specify if USD withdrawal is an option)
  • Bank for fund transfer:
    • Bank name: [Your Bank Name]
    • Account holder: [Your Name]
    • SWIFT / Routing number: [Your bank routing details]
    • Account number: [Your bank account number]
  • CRA Non-Residency Determination Letter: [To be attached when received]
  • Date of non-residency status: [Your CRA non-residency effective date]

I authorize [Institution Name] to release and transfer funds from my LIRA account upon receipt and verification of the CRA’s non-residency determination letter and completion of all required forms.

Thank you for your assistance. Please contact me at [Your Email] should you require any further information.

Sincerely,
[Your Full Name]
[Your Contact Address]
[Your Email & Phone Number]

The LIRA cash out Checklist

✅ Complete Form NR73 to get written CRA confirmation of your non-resident status.
✅ Update your broker’s tax forms (W-9, RC-518) and provide your SSN proof.
✅ Expect limited or restricted trading during this phase — consider holding cash.
✅ After 24+ months of non-residency and once you have CRA confirmation, submit your LOD.
✅ Withdrawal may be subject to non-resident withholding tax (often around 25%) and U.S. tax reporting. Consult a cross-border tax advisor.