Financial Hardship Unlocking - User Guide for Owners (Applicant)
Contents
1. 10 of 12 Queen s Printer for Ontario 2014 the amount of your expected total income for the 12 months following the date you sign the application is accurate Part 4 Consent of the owner s spouse to the withdrawal Your spouse must complete this part If you have a spouse on the day you sign the certification you may only withdraw money from your locked in account if your spouse consents to the application Your spouse s consent is not required if you and your spouse are living separate and apart as a result of a breakdown in your spousal relationship or the money in your locked in account came from the pension plan of another person such as your former spouse If your spouse wishes to consent your spouse must fill in Part 4 and sign and date it in the presence of a witness who is at least 18 years of age The witness must also sign Part 4 An employee of the financial institution may be the witness The owner of the locked in account cannot be the witness If your spouse is not sure about the legal consequences of signing the consent he or she should seek legal advice Your spouse is under no obligation to sign But if spousal consent is required and your spouse does not consent the financial institution must refuse your application Your spouse must indicate that he or she understands that i the owner is making an application to withdraw money from the locked in account and that the owner cannot withdraw2. you cannot apply again under this category this year Question 2 What is your expected total income from all sources before taxes for the 12 months following the date you sign this Application This is an estimate of how much you expect to receive for the next 12 months before taxes starting on the date you sign the application It is not based on the amount you have received in the past 12 months If you do not expect to receive any income you should enter zero The following amounts should be included in determining your expected total income for the next 12 months wages salaries casual earnings and amounts paid under a training program gross amount before taxes income from self employment excluding expenses but before taxes rental income excluding expenses but before taxes payments received under an annuity pension plan registered retirement savings plan registered retirement income fund superannuation scheme or earnings replacement program insurance benefits spousal support payments capital gains arising from the sale or disposition of an asset cash payments received under a government program except for those excluded below such as Canada Pension Plan Old Age Security or Ontario Works Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 7 of 12 Queen s Printer for Ontario 2014 interest and dividend income on any investment and income fr
3. your application If you are not sure whether the money in your locked in account is subject to Ontario pension law ask your financial institution The application form You must apply on the forms approved by the Superintendent of Financial Services The application for low expected income must be made on Form FHU 4 for the year in which you are applying Forms and other information about financial hardship unlocking may be accessed on FSCO s website at http www fsco gov on ca en pensions financial hardship Pages fhu aspx You may also contact FSCO and request an application form or you may pick up an application form from FSCO s office You may also ask your financial institution for an application form If an application is signed in 2014 the 2014 form must be used You cannot use a previous year s form One application per year per category per account You may only make one application from your locked in account each calendar year under the low expected income category Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 3 of 12 Queen s Printer for Ontario 2014 The key date is the date your financial institution receives your complete application along with any required accompanying documents This could be the date the completed application is submitted in person or the date it is received by mail fax or electronically Deadlines and timelines There are a number of
4. your spouse in question 3 Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 6 of 12 Queen s Printer for Ontario 2014 Just because you and your spouse are living in different residences on the date the application is signed does not automatically mean you are not spouses for the purpose of this application Your living separate and apart must be because there has been a breakdown in the spousal relationship If one spouse is living elsewhere because of his her work or because he she is looking after a relative or friend or for health reasons or for other reasons that are not related to their spousal relationship it does not mean you are living separate and apart for the purpose of this application It is possible that you may have more than one spouse That is you may be separated from your wife or husband although you are still married but you may be living common law with another person who meets the definition of spouse in the Pension Benefits Act In this case you should fill in the information about the spouse with whom you are living when you apply in this example your common law spouse The money can only be withdrawn if that person provides his or her consent see Part 4 Part 2 Expected Income Question 1 Other than this application have you applied to withdraw money from this locked in account based on low expected income at any time during 2014 If you answered yes
5. FINANCIAL HARDSHIP UNLOCKING USER GUIDE FOR OWNERS Applicants FORM FHU 4 LOW EXPECTED INCOME Contents Introduction and overview Main requirements for applying for financial hardship unlocking Money must be locked in and you must be the owner Money must be subject to the Pension Benefits Act The application form One application per year per category per account Deadlines and timelines Minimum and maximum amounts you may apply for When your application is approved Payment Withholding tax and other deductions Entitlement to other government benefits Loss of creditor protection Privacy Filling out FHU Form 4 Low Expected Income General information about Form 4 Part 1 Information about yourself and your locked in account Part 2 Expected income Part 3 Certification by the owner of the locked in account Part 4 Consent of the owner s spouse to the withdrawal Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 1 of 12 Queen s Printer for Ontario 2014 INTRODUCTION AND OVERVIEW This User Guide is intended to assist owners of locked in accounts who wish to apply to withdraw money from locked in accounts because of financial hardship in accordance with the requirements of Regulation 909 R R O 1990 under the Ontario Pension Benefits Act Please note that this User Guide is a guideline only It is meant to provide guidance to individ
6. at amount in box 3c This is the maximum amount that you may apply to withdraw under this category Examples Sue expects her income over the next 12 months to be 30 000 00 before taxes Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 8 of 12 Queen s Printer for Ontario 2014 In box 2 she enters 30 000 00 In box 3b Sue enters 75 percent of the amount she entered in box 2 which is 22 500 00 Box 3a 26 250 00 minus box 3b 22 500 00 equals 3 725 00 which Sue enters in box 3c That is the maximum amount she can withdraw in 2014 based on her estimated expected income Earl is unemployed and does not expect to receive any income over the next 12 months but he has applied for government assistance He estimates that he will receive 10 000 00 in government assistance so he enters 10 000 00 in box 2 75 percent of that amount is 7 500 00 which is the amount he enters in box 3b Box 3a 26 250 00 minus box 3b 7 500 00 equals 18 750 00 which Earl should enter in box 3c as his maximum Lorraine has lost her job but expects to receive 40 000 00 from rental income investments government assistance and spousal support She enters 40 000 00 in box 2 Since that amount is greater than 35 000 00 2 3 of the Year s Maximum Pensionable Earnings for 2014 Lorraine s application must be refused Question 4 How much money are you applying to withdraw from this locked in account You do not h
7. ave to apply for the maximum amount you are entitled to In the examples above Sue can decide to take the maximum so she enters 3 725 00 in box 4 Earl decides he does not need the entire amount he is entitled to so he enters 12 000 00 in box 4 You cannot apply for an amount that is e greater than the amount in your locked in account as of the date you sign this application e greater than the maximum amount you are allowed to withdraw box 3c or e less than 500 00 Remember that the amount you apply for will be reduced by withholding tax and may be reduced further by an administrative fee Part 3 Certification by the owner of the locked in account Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 9 of 12 Queen s Printer for Ontario 2014 You must sign and date the certification in Part 3 in the presence of an adult witness who must be 18 years of age or older The witness cannot be your spouse or dependant An employee of your financial institution may be a witness Once the application is signed you have 60 days to submit it to the financial institution Certifications regarding spousal status You must certify certain information regarding your spousal status on the date you sign the application In Part 3 you must check only one of four boxes i You have a spouse and your spouse consents to the withdrawal of money from the locked in account If you check this box you wil
8. important deadlines and timelines which must be met i 60 day time limit for submitting the application Once you sign the application and your spouse signs the consent if applicable you have 60 days to submit it to the financial institution If you submit it after 60 days from the date you signed it you will have to fill out another application ii 30 day time limit for payment by financial institutions The financial institution must review the application and determine if it meets the requirements in the Regulation for the low expected income category of financial hardship If the requirements are met the financial institution must approve the application and make the payment within 30 days from the day it received the completed application Minimum and maximum amounts you may apply for For all applications the minimum amount you can apply for is 500 00 If you apply for less than 500 00 the application must be refused The maximum amount for the low expected income category is described on page 8 You cannot apply for an amount greater than the maximum amount to which you are entitled if you do apply for an amount greater than the maximum the financial institution should advise you to amend the application A financial institution is not permitted under the Regulation to pay an amount greater than the maximum the owner is entitled to Please refer to the section below Part 2 question 3 for more information about the ma
9. l institution receives the completed application You may make more than one application for a withdrawal from the same locked in account under different categories of financial hardship in the same year but you must use different forms Part 1 Information about yourself and your locked in account Question 1 Fill in the information about yourself in each box Question 2 Fill in the name of the financial institution that holds your locked in account for example the name of the bank insurance company credit union and the number of the account The only number in the box should be the number of the account from which you wish to withdraw money Information about your spouse Question 3 If you have a spouse on the date you sign this application fill in the information about your spouse in each box Spouse is defined in the Pension Benefits Act as either of two persons who i are married to each other or ii are not married to each other and are living together in a conjugal relationship a continuously for a period of not less than three years or b inarelationship of some permanence if they are the natural or adoptive parents of a child both as defined in the Family Law Act If you have a spouse and you are living separate and apart from your spouse due to a breakdown in your spousal relationship your spouse is not required to consent to the withdrawal However you must still fill in the required information about
10. l need your spouse to complete Part 4 ii You have a spouse but you and your spouse are living separate and apart as a result of a breakdown in your spousal relationship iii You have a spouse but none of the money in your locked in account is derived directly or indirectly from a pension benefit provided in respect of your past or current employment This refers to a situation where you are seeking to withdraw money from a locked in account and this money did not come from your pension but from someone else s pension plan such as your former spouse For example as a result of a divorce John was required to pay a portion of his pension to Jane and the money was paid into Jane s locked in account Jane subsequently married Bob and now wants to apply to withdraw money from her locked in account for financial hardship Since the money was earned by John Jane s current spouse Bob is not required to consent to the application John is no longer Jane s spouse so his consent is no longer required iv You do not have a spouse Other certifications By signing the application you are also certifying that all the information in the application and any accompanying documents is accurate and complete you have not previously applied to withdraw money for low expected income in this calendar year from this locked in account and Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page
11. mission of Ontario FSCO FSCO no longer has the authority to process these applications Your financial institution is responsible for answering questions and providing information to you regarding your application Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 2 of 12 Queen s Printer for Ontario 2014 MAIN REQUIREMENTS FOR APPLYING FOR FINANCIAL HARDSHIP UNLOCKING Money must be in a locked in account and you must be the owner There are three different types of locked in accounts i Locked in retirement accounts LIRAs ii Life income funds LIFs There are two kinds of LIFs Old LIFs and New LIFs iii Locked in retirement funds LRIFs To apply for financial hardship withdrawal your money must be in one of these accounts If your money is still in your pension plan you cannot apply to withdraw money on the basis of financial hardship You must be the owner of the locked in account to apply for financial hardship The locked in account must be in your name not in your spouse s name If you are not sure whether you are the owner of the account ask your financial institution or financial advisor Money must be subject to the Pension Benefits Act The money in your locked in account must be subject to Ontario pension law not federal pension law or the pension law of another province If the money is not subject to Ontario pension law the financial institution must refuse
12. om any other source All amounts entered into the form are before any deduction of taxes Do not include any income your spouse expects to receive Do not include the amount you expect to withdraw under this category if your application is approved In addition the following payments should not be included in your estimate arefund or repayment of taxes a refundable tax credit arefund of tax paid under the Ontario Child Care Supplement for Working Families program under section 8 5 of the Income Tax Act the payment to you of an Ontario child benefit under section 8 6 2 of the Income Tax Act or under section 104 of the Taxation Act 2007 apayment received by a foster parent under the Child and Family Services Act or child support payments received under a court order or an agreement Enter the total amount of expected income in box 2 In 2014 if the amount you enter in box 2 is greater than 35 000 00 your application must be refused Question 3 What is the maximum amount you may withdraw Your maximum is calculated by subtracting the amount in box 3b from the amount in box 3a The amount in box 3a for 2014 is 26 250 In box 3b fill in 75 percent of your expected total income for the next 12 months This is 75 percent of the amount you entered in box 2 If your expected total income for the next 12 months is zero fill in zero in box 3b Subtract the amount in box 3b from the amount in box 3a and fill th
13. ply to withdraw an amount greater than the maximum to which you are entitled under the Regulation or greater than the amount in your account Entitlement to other government benefits When you withdraw money from a locked in account that amount could be considered as income This could affect your eligibility for benefits under a government program such as social assistance If you have a question as to whether this could apply to you you should contact the government agency or department that administers the program or provides these benefits Loss of creditor protection Money in locked in accounts cannot be seized by creditors However if you withdraw money from a locked in account for financial hardship it will no longer be protected from creditors and may be seized Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 5 of 12 Queen s Printer for Ontario 2014 Privacy The financial institution must advise each owner about the purpose for which personal information is collected used or disclosed in accordance with any applicable law FILLING OUT FHU FORM 4 LOW EXPECTED INCOME General Information about Form 4 You may make one application under the low expected income category during a calendar year If you have already applied under low expected income you cannot apply again until the next calendar year An application is considered to have been made in the year in which the financia
14. the money from the locked in account without your spouse s consent ii as long as this money is in the locked in account your spouse may have a right to a share of this money if there is a breakdown in your spousal relationship or if you die and iii if any money is withdrawn from the locked in account your spouse may lose any right that he or she has to a share of the money withdrawn Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 11 of 12 Queen s Printer for Ontario 2014 If the financial institution is not satisfied that the spouse understands what he or she is signing it may refuse the application The financial institution may request proof of the spouse s identity and spousal status Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 12 of 12 Queen s Printer for Ontario 2014
15. uals who are filling out applications Where this guideline conflicts with the Financial Services Commission of Ontario Act 1997 S O 1997 c 28 FSCO Act the Pension Benefits Act R S O 1990 c P 8 or Regulation 909 R R O 1990 Regulation the FSCO Act Pension Benefits Act or Regulation govern There are four categories of financial hardship i medical expenses ii arrears of rent or debt secured on a principal residence such as a mortgage iii payment of first and last months rent and iv low expected income This User Guide is only for category iv low expected income If you want to make an application during this year under one of the other categories you must make a separate application For applications under other categories please refer to the appropriate User Guide on the FSCO website Effective January 1 2014 all applications for financial hardship withdrawals must be made to the financial institution which holds and administers your locked in account A financial institution may be one of the following institutions bank life insurance company credit union caisse populaire trust company If you have invested the money in your locked in account through a financial advisor you should ask your advisor if you should make your application through him her or directly to the financial institution that holds your locked in account You cannot make your application to the Financial Services Com
16. ximum amount you may withdraw for low expected income Effective 2014 01 16 User Guide for Owners Applicants Form 4 FSCO 1299E I Page 4 of 12 Queen s Printer for Ontario 2014 WHEN YOUR APPLICATION IS APPROVED Payment The money must be paid in one lump sum It cannot be paid monthly or in any other manner It cannot be transferred to another tax deferred account such as a registered retirement savings plan or a registered retirement income fund Withholding tax and other deductions The amount you are approved for will be reduced by an amount withheld for income tax This is because when money is paid out of an unlocked account financial institutions are required to withhold a certain amount of money for income tax and pay that amount to the Canada Revenue Agency CRA In addition your financial institution may charge an administrative fee for your application which will be deducted from the amount that was approved for you For example if you apply and are approved for a withdrawal of 20 000 00 the financial institution must withhold approximately 30 percent of that amount which is 6 000 00 for income tax and pay it to CRA If the financial institution charges you a 50 00 fee that amount will also be deducted Therefore you will receive 13 950 00 If you want to receive a greater amount in cash than what you would have received after deductions you should apply to withdraw a greater amount But you cannot ap
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