Lifelong Learning Plan

Lifelong Learning Plan allows taxpayers to withdraw from their RRSPs for the purpose of financing full time training or education. Ideally, funds from RRSPs/RRIFs are meant to be withdrawn when you’re in retirement and at a much lower tax bracket than when you were when the funds were contributed into the account.  With an RRSP, an account holder would have three types of withdrawal options:

1. Regular Withdrawal
2. Home Buyers’ Plan Withdrawal
3. Lifelong Learning Plan Withdrawal

The LLP is a different from Registered Education Savings Plan and cannot be used to finance your children’s education.

Qualifying for the Program

To qualify for the program, you must be an Registered Retirement Savings Plan account holder and be a Canadian resident. In addition, you’d have to be enrolled or have received an offer of enrollment.

• The individual must be in a qualifying educational program.
• The institution must be a designated educational institution.
• The taxpayer must be a full time student.

Please note that an individual can also be enrolled part time and qualify, if they meet the disability conditions.

Qualifying Educational Program

A qualifying educational program is one that lasts for more than three months and requires the student to spend at a minimum 10 hours per week on course work. This could include lectures, training, lab work, research, etc.

Amount of Withdrawal

A Lifelong Learning Plan participant can withdraw up to $20,000 from their RRSP, limited up to $10,000 in a calendar year.

The Lifelong Plan Participant participant also has to enroll before March of the year after the LLP withdrawal. They must still be enrolled in the program in April of the year after the LLP withdrawal unless the course has been completed.

There will not be any tax withheld at the source on the amount of withdrawal. The RRSP issuer will send you a T4RSP slip showing the amount withdrawal. You would have to proceed to file a tax return even if no tax is owed.

Repayment of Withdrawals

The repayment period is 10 years or when the LLP participant leaves the educational program. The payment periods start no later than 60 days following the fifth year after the first LLP withdrawal.

The repayment period could start sooner if the LLP participant fails to qualify for a full time education for at least 3 consecutive months within 2 years of the 5 year period. Repayment will start within 60 days following the second year.

Any amount that is not repaid is added added on top of income.

Keep in mind that the repayment period could be shorter than 10 years if;

• If the participant dies
• If the participant becomes a non resident
• If the participant reaches 72 years of age or older

Lifelong Learning Plan Withdrawal Form

To withdraw as part of the Lifelong Learning Plan, a taxpayer would have to complete RC96 Lifelong Learning Plan Request to Withdraw Funds form.

The bottom line is that many Canadians are not aware that they can withdraw from their Registered Retirement Savings Plan without incurring a tax penalty. The Lifelong Learning Plan is a great way for Canadians to continue their university or college education. One point to remember is that whatever amount that is withdrawn, must be paid back within a specified period of time. If the amount withdrawn from the RRSP is not paid back, it is added to your income at the end of the year when you file your taxes. For more information, refer to Government of Canada’s official website here.