RRSP – LLP (LIFELONG LEARNING PLAN)

• The Lifelong Learning Plan (LLP) is a government program that lets you to temporarily withdraw money from your RRSP 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’t be used for your children’s education.
• Since withdrawing money from your RRSP is borrowing money, you don’t have to pay any interest. 
• You don’t pay income tax or interest on your withdrawals, but you also can’t claim deductions again when you repay.

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.

Applying for the Lifelong Learning Plan

• To apply for the Lifelong Learning Plan, you’ll need to use Form RC96, Lifelong Learning Plan (LLP)—Request to Withdraw Funds From an RRSP.
• You will need to complete this form for each withdrawal you make. 
• You fill out Part 1 of the form and your RRSP issuer will fill out Part 2. 
• Your RRSP issuer will not withhold tax from your withdrawals if you meet the LLP conditions.
• You can’t withdraw LLP funds immediately; you must wait 90 days to use the Lifelong Learning Plan.
• The amount you withdraw is not limited to the cost of your school expenses. 
• You can use the funds for any purpose if you meet the conditions of the Lifelong Learning Plan. 
• You can withdraw $20,000 each time you use the LLP. You must repay your balance before you can borrow again. 
• If you withdraw more than your annual limit of $10,000, the excess will be treated like income.

How to repay the Lifelong Learning Plan

• If you fail to repay your LLP funds, you’ll have to pay income taxes on whatever you withdrew. 
• You have up to 10 years to repay the money you withdrew under the Lifelong Learning Plan.  
• You must repay one-tenth of the total withdrawal each year until you’ve repaid the full amount. 
• If you don’t repay your withdrawals on time, you’ll have to pay income tax on the portion you didn’t pay. 
• For example, if you had to repay $1,500 this year, but only repaid $1,000, the government would consider the leftover $500 as income.
• To make your repayments, simply contribute to your RRSP during the repayment year or during the first 60 days of the next year. 
• Designate the repayment as a repayment on your taxes for that year. 
• Repayments do not count toward your annual RRSP contribution limit, so you must make repayments even if you’ve already contributed the maximum for that year. 
• You must start paying the fifth year after your first withdrawal. For example, if you made your first withdrawal in 2020 you would have to start paying in 2025.
• The latest year you can start repaying your LLP withdrawals is the fifth year after your first withdrawal, but most people start repaying before that.

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