If you own a home or plan to buy one, you are probably familiar with the Home Buyers’ Plan, or HBP. But did you know that there’s a similar program to assist you if you want to go back to school?
The Lifelong Learning Plan, or LLP, is the perfect tool to use for professional development or a career change. Like the HBP, it allows you to take money out of your registered retirement savings plan, or RRSP, as a kind of loan, without paying any taxes or penalties.
Here’s how it works.
As long as you are registered as a full-time student in a qualifying educational program, the LLP allows you to withdraw up to $10,000 a year from your RRSP, to a maximum of $20,000 over a four-year period.
You can wait up to five years after your first withdrawal before starting to repay your LLP, subject to certain conditions. Then, all you need to do is designate a portion of your annual RRSP contribution as an LLP repayment. Each annual repayment must equal at least 10% of the total amount you withdrew; the whole series can be spread over a maximum of 10 years.
That’s not all.
Using an LLP, you can finance your spouse’s return to school, or the two of you can both contribute to funding the plans of one or the other. You could even help your spouse now and use the program yourself later on. In fact, as long as your previous withdrawal has been repaid, you can use the LLP as many times as you wish. Note, however, that an LLP cannot be used to finance training or education for your children or your spouse’s children. For that purpose, the registered education savings plan, or RESP, is the appropriate vehicle, but it works on very different principles.
So if you or your spouse are considering a return to school, talk to your advisor about the LLP.
The following sources were used to prepare this video:
Canada Revenue Agency, “Participating in the Lifelong Learning Plan (LLP)”; “Repayments to your RRSP under the LLP”; “What is the Home Buyers' Plan (HBP)?.”
CFFP, “Régime d’encouragement à l’éducation permanente (REEP).”
Desjardins, “Lifelong Learning Plan (LLP).”
Government of Quebec, “Lifelong Learning Plan (LLP).”