The Lifelong Learning Plan (LLP) is a program that allows Canadians to withdraw up to $10,000 in a calendar year from their Registered Retirement Savings Plans (RRSPs) to pay for full-time training or education, up to a maximum of $20,000.
The LLP is a tax-friendly way for individuals to finance training or education with funds they’ve already saved for retirement, as long as the amounts are paid back according to the program requirements.
A Statement of Account will be provided each year along with your Notice of Assessment to show your LLP withdrawals, balance, repayments to date, and the amount you need to repay the following year.
Here are some important facts and details about the Lifelong Learning Plan.
Key Takeaways
- You can withdraw up to $10,000 annually from your RRSP to pay for your education.
- The LLP is intended for full-time students in an eligible program.
- Repayment must start 5 years from withdrawal and the total must be repaid in 10 years.
- Withdrawals are not taxed – with a few exceptions.
Who is eligible for the RRSP Lifelong Learning Plan?
You can withdraw funds from your RRSP through the Lifelong Learning Plan for training or education for yourself, your spouse, or your common-law partner.
However, the LLP cannot be used to pay for education or training for your children or the children of your spouse or common-law partner.
Individuals who have withdrawn from their RRSPs through the Home Buyers’ Plan (HBP) can also participate in the Lifelong Learning Plan, even if they have not yet fully repaid their HBP withdrawals.
What educational programs qualify for the RRSP Lifelong Learning Plan?
In order to qualify for the Lifelong Learning Plan, the LLP student must enroll as a full-time student in one of the eligible educational programs at a designated educational institution. You may be eligible as a part-time student if you meet disability conditions.
Those participating in the LLP must use the funds for programs intended to improve their skills in an occupation or at a post-secondary level.
Programs must last 3 consecutive months or more and require students to spend 10 or more hours per week on courses, lectures, training, or laboratory work.
Eligible educational institutions include:
- Canadian universities, colleges, and other educational institutions,
- universities outside Canada if the program leads to a bachelor’s degree or higher, and
- post-secondary institutions in the U.S. if the student lives near the border and commutes to the school.
For more information, see: Participating in the LLP.
How to repay your RRSP Lifelong Learning Plan withdrawals
Repayment of RRSP withdrawals must begin based on timelines set out by CRA, and must be fully repaid within 10 years.
Your repayment period will be determined by CRA checking to see if you’re a qualifying student for at least 3 months during the year. If you maintain your status as a qualifying student you can delay the start of your repayments until the 5th year after your first withdrawal from the plan.
If you don’t meet the conditions laid out by CRA qualifying you as a student for 2 years in a row, your repayment period will typically begin in the 2nd of those 2 years. No matter the length of your program, the longest you can wait to begin repayment is the 5th year after your first LLP withdrawal.
The amount you need to repay will be located on your annual Statement of Account, and repayments are made by contributing to your RRSP in the repayment year or within the first 60 days in the year following a repayment year.
To learn more, see: Repayments to your RRSP under the LLP.
How are LLP RRSP withdrawals taxed?
The amounts withdrawn from your RRSP are not included in your income for a taxation year nor will the RRSP issuer withhold tax.
However, if you withdraw more than the annual LLP limit of $10,000, the excess will be added to your income for the year. Similarly, if you withdraw more than the maximum of $20,000, the excess will be included in your income in the year you exceed the limit.
You may also be taxed on any amounts that you were required to pay back that you did not repay in a given repayment year.
Your thoughts on the RRSP Lifelong Learning Plan
What do you think of the RRSP Lifelong Learning Plan? Would you consider participating?
Let us know in the comments below.
FAQ
What can the RRSP Lifelong Learning Plan be used for?
The RRSP Lifelong Learning Plan can be used for full-time training or education for you, your spouse, or your common-law partner.
Are there RRSP Lifelong Learning Plan withdrawal limits?
The Lifelong Learning Plan withdrawal limits are $10,000 per calendar year, to a maximum of $20,000 total.
How soon must I pay back my RRSP Lifelong Learning Plan withdrawals?
You must start paying back withdrawals from your Lifelong Learning Plan once you are no longer a qualifying student (studying full-time for at least 3 months in a year). The longest you can wait to begin repayment is the 5th year after your first LLP withdrawal.
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