Are you thinking of going back to school, perhaps to further your education, or start a new career altogether? Did you know you can access funds from your RRSP to do so? The Lifelong Learning Plan (LLP) allows you to withdraw up to $10,000 in a calendar year from your RRSPs to finance full-time training or education for you or your spouse or common-law partner. Let’s go over the key information:
Who can participate in the LLP?
To participate in the LLP, you must meet all four of the following conditions:
you have an RRSP,
you are a resident of Canada,
the LLP student is enrolled or has received an offer to enroll before March of the following year as a full-time student, and
the student must enroll in a qualifying educational program at a designated educational institution.
How to participate in the LLP
To make an LLP withdrawal, you will need to complete an LLP RRSP Withdrawal form for each withdrawal you make. Your RRSP issuer or Advisor will be able to provide and assist with the form and submit it on your behalf.
Funds must be in your RRSP for at least 90 days before they can be withdrawn. You are not able to open an RRSP and immediately withdraw the funds.
How much can you withdraw?
You can withdraw up to a total of $20,000 from your RRSPs, and a maximum of $10,000 in each calendar year. Your RRSP issuer will not withhold tax from the funds you withdraw if you meet the LLP conditions, as the funds are non-taxable.
Repayments to your RRSP under the LLP
When you withdraw funds from your RRSP under the LLP, you have to make repayments to your RRSP and over a period of 10 years. Generally, for each year of your repayment period, you must repay 1/10 of the total amount you withdrew until the LLP balance is zero. This amount that you recontribute is not eligible as an income tax deduction as it is a repayment, and you will report it on your tax return as such.
If you do not make a repayment for the year, the amount owed must be reported as income on your tax return for that year.
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