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Lifelong Learning Plan (LLP)

There is no doubt COVID-19 has affected many sectors of the economy. As a result, many people are considering new career paths. Often, the challenge with a new career is education and how to pay for it. Paying for it may be easier than you think. If you have a registered retirement savings plan (RRSP), the Canadian government lets you finance your education by participating in the Lifelong Learning Plan (LLP). The Lifelong Learning Plan lets you make a temporary withdrawal of up to $20,000 from your registered retirement savings plan (RRSP). The maximum withdrawal is $10,000 annually & the maximum repayment period is 10 years.

Participation in the LLP

If you are enrolled as a full-time student in a LLP qualifying education program you can participate in the LLP. Disabled students can also participate in the LLP & attend school on a part-time basis. See the detailed participation requirements on the government of Canada website.

The great thing about the LLP is that, subject to the conditions above, you can access it as many times as you wish until you turn 71 years old. We would advise that you plan carefully, given the maximum withdrawal limit of $20,000. Spouses/partners can participate in the LLP at the same time. Even if you already participate in the Home Buyers’ Plan (HBP) you can still participate in an LLP.

Repaying Your RRSP Under the LLP

You have a period of 10 years to repay the LLP. The amount you must repay each year is 1/10th of the total amount you withdrew until the balance owing is zero. If you don’t meet the repayment schedule, then the amount you owe is added to your personal taxes as income. See the Canada Revenue Agency (CRA) website for information on Repayments to your RRSP under the LLP.

Drawbacks of the LLP

There are a couple of disadvantages to financing your education through the LLP. The first is that you can’t finance your children’s education through the LLP. The second, especially depending on your age, is that borrowing from your RRSPs can result in a lower level of savings, at retirement.

Our tax experts can help you determine whether the LLP is the right option for you. Contact us for more information.

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