The Lifelong Learning Plan (LLP) is a Canada Revenue Agency program that allows you to withdraw up to $20,000 (annual limit of $10,000) from your registered retirement savings plans (RRSPs) to finance full-time training or education for you, your spouse, or common-law partner. You cannot participate in the LLP to finance your children’s training or education, or the training or education of your spouse’s or partner’s children.
Eligibility conditions are to be enrolled:
- as a full-time student1 (or have received an offer to enrol before March of the next year);
- in a qualifying educational program1;
- at a designated educational institution1.
You must enrol before March of the year after the LLP withdrawal or still be enrolled in that program in April of the year after the LLP withdrawal, unless you have already completed the program by then. If you withdraw more than the annual LLP limit of $10,000, the excess must be included in your income for the year of the withdrawal. The excess does not reduce your total LLP limit of $20,000. If you withdraw more than the total LLP limit of $20,000, the excess must be included in your income for the year you exceed the total LLP limit.
You must repay these withdrawals to your RRSPs over a period of no more than 10 years. You will receive an LLP statement of account each year on your Notice of Assessment or Notice of Reassessment. This statement will show the total LLP withdrawals, the amount you have repaid to date, your LLP balance, and the amount you have to repay the following year. Any amount that you do not repay when it is due will be included in your income for the year it was due.
What happ ens if I leave the educational program?
If you leave the program before April of the year after the withdrawal, you can still make your repayments over a 10-year period if less than 75% of the tuition is refundable by the educational institution.
If you leave the program before April of the year after the withdrawal, and 75% or more of the tuition is refundable, you have to cancel the LLP withdrawal.
How often can I participate in the LLP?
You cannot withdraw more than $20,000 each time you participate in the LLP, which corresponds to the program’s maximum limit. Once your LLP balance is fully repaid, you can participate in the LLP again and withdraw up to $20,000 over a new qualifying period.
You haven’t contributed to an RRSPS?
If you simply don’t have RRSPs at all or you’re lacking the full $20,000, you could nevertheless participate in the LLP by taking up a Laurentian Bank RRSP loan. TThe advantage is twofold: the loan costs you almost nothing and it entitles you to a tax refund.
- Step 1: Determine your maximum eligible amount to an RRSP.
- Step 2: Borrow the amount from the Laurentian Bank and invest the funds in a Laurentian Bank RRSP.
- Step 3: Withdraw your RRS P under the terms of the LLP and reimburse your loan.
- Result: You are entitled to a tax refund that you can apply towards your education. Remember that you will have to repay a portion of the amount withdrawn each year, over a period of no more than 10 years.