Are you considering mid career education or training? Life Long Learning Plan (LLP)

The Lifelong Learning Plan (LLP) allows you to withdraw funds from your RRSP for education or training expenses. You can withdraw funds for your spouse’s education or training expenses as well. The amount you withdraw is not limited to the amount of your tuition or other education expenses.

This is great benefit for someone who would like to make a mid career change. The maximum amount you can withdraw is 20 Kin total but annual maximum amount is 10 K. You can withdraw from multiple RRSPs provided that you are the annuitant (owner) of the RRSPs and the amount requested are below the maximum stated above.

Conditions:

The following conditions must be met before the withdrawal:

• The student must be a full time student (or a part-time student if he or she meets the disability conditions).
• You (the RRSP owner) is Canadian resident.
• The student has to enroll in a qualifying educational program at a designated educational institution.
• The participation in the Lifelong Learning Plan (LLP) has to be done before the end of the year the annuitant (owner) of the RRSP reaches the age of 71 years old.
• The funds are in the RRSP plan more than 89 days.

Process:

• Complete Part 1 of the Form RC96, Lifelong Learning Plan (LLP) - Request to Withdraw Funds From an RRSP, for each RRSP withdrawal you would like to make. Submit the form to your RRSP provider.

You can keep withdrawing amounts from your RRSPs until January of the fourth year after the year you made your first withdrawal, as long as you meet the qualifying conditions every year.

Repayment:

Repayment must start second year after you cease to be a full time student for at least 3 months in a year. But if the LLP student continues to meet this condition every year, your repayment period starts in the fifth year after your first LLP withdrawal.

Each year 1/10 of the withdrawal must be paid back.

Benefits:

• To  enhance your education or training mid career, this is a great opportunity.
• To help your spouse enhance education or training this can be used.
• You can participate in the program multiple times (Once you have paid back previous balance you can participate in the following year )

Disadvantage:

• If you don’t re-contribute the annual repayment amount will be added back as income in your tax return.
• You can not withdraw the amount for education or training for your children.
• You need to be a full time student unless you meet the disability conditions.