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  • Writer's pictureVolpe Financial Solutions

WHAT IS THE LIFELONG LEARNING PLAN?

The Lifelong Learning Plan (LLP) is a government program that lets you to temporarily



withdraw money from your Registered Retirement Savings Plan to pay for full-time education or training. You can withdraw up to $10,000 per year up to a total of $20,000, but it must be repaid within 10 years. The money can be used by you, your spouse, or your common law partner. It can not be used for your children’s educations.


The Lifelong Learning Plan is similar to the Home Buyers’ Plan, a program that allows first-time homebuyers to withdraw money from their RRSP for a down payment on a home purchase. Essentially, these programs are ways to borrow money from yourself to pay for some of life’s biggest - and necessary - expenses.


Since withdrawing money from your RRSP is borrowing money, you don’t have to pay any interest. You would just be paying it to yourself anyway. You don’t pay income tax on your withdrawals (since it’s not income—it was already your money), but you also can’t claim deductions again when you repay.


Furthermore, your RRSP is a tax-advantaged account. You aren’t taxed on the money you contribute, up to 18% of your income or $27,230, whichever is smaller (for tax year 2020). By using your RRSP by way of the Lifelong Learning Plan, you can pay for school with untaxed money.


This means it’s smart to pay for your education with the Lifelong Learning Plan even if you already have the cash. You’ll save money by using pre-tax dollars as opposed to the post-tax money in your high interest savings account.

 

Lifelong Learning Plan eligibility

To be eligible for the Lifelong Learning Program, you must be a Canadian resident and enrolled in (or received a written offer to enroll in) a qualifying educational program at a designated educational institution. The program must run for at least three consecutive months. You must spend at least 10 hours a week on course work.


There are no limits to the number of times you can use the Lifelong Learning Plan in your lifetime. Once you pay back what you owe, you can take out another LLP withdrawal.

 

Payback time 

Generally, you need to repay 1/10th of your original Lifelong Learning Plan balance until you repay the full amount you withdrew.


The timing of when you need to start making those repayments depends on your status as a student. If you’re entitled to the education amount as a full-time student for at least three months in a year, you don’t need to start making repayments. If you don’t meet this education amount condition two years in a row, your ten-year repayment period begins in the second of the two years.


Important to know:

  1. Participate in the plan as many times as you wish over your lifetime. Starting the year after you bring your LLP balance to zero, you can participate in the plan again

  2. Participate in the LLP even if you have withdrawn amounts from your RRSP under the Home Buyers' Plan (HBP) that have not been fully repaid

  3. You can participate in the program as many times as you wish over your lifetime, provided you have fully paid back previous LLP withdrawals. You can also participate in the LLP at the same time as your spouse; if you do so, the family withdrawal maximum will total $40,000

  4. You can’t use the program to finance your children’s post-secondary education,— that’s the function of the registered education savings plan (RESP).

  5. The program is designed for full-time study only for both the account holder and the partner unless you meet one of the disability conditions, where you can qualify for part-time studies.

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