What is it?
Épargne Placements Québec’s registered retirement savings plan (RRSP) gives you the option of temporarily withdrawing funds under the Lifelong Learning Plan (LLP).
The LLP allows you to withdraw up to $20 000 from your RRSP over a four-year period to finance your, your spouse’s or your de facto spouse’s return to school. To do so, the person must be considered an eligible student.
The LLP cannot be used to finance your children’s, or your spouse’s or de facto spouse’s children’s, training or education. You have the option of withdrawing up to $10 000 a year.
You do not have to pay income tax on the amounts withdrawn under the plan. The funds must have been in your RRSP for a minimum of 90 days for the withdrawal to qualify.
What educational programs qualify for the LLP?
To qualify, the program must meet the following conditions. It must:
- last three consecutive months or more;
- require a student to spend 10 hours or more a week on courses or work in the program;
- be offered by a designated educational institution.
When do you have to start paying it back?
The beginning of the repayment period is determined by verifying whether the eligibility requirements, such as being a full-time student for at least three consecutive months, have been met. If the LLP student does not meet the condition two years in a row, the repayment period will generally begin the second year. If the LLP student continues to meet the requirements, the repayment period will begin five years after the first withdrawal under the plan.
How much do you have to pay back each year?
Each year, the Canada Revenue Agency will send you a statement indicating:
- the amount repaid to date;
- unpaid amounts that have been included in your income;
- the balance to be repaid;
- the amount you must contribute to your RRSP the following year as an LLP repayment.
The amount to be repaid each year is 1/10 of the amount withdrawn from your RRSP under the LLP. Amounts that are not repaid when due become taxable withdrawals for the year in which they were to be repaid. Amounts repaid are not considered RRSP contributions and as such, are not tax deductible.
In the event of a change to these conditions, please note that the Canada Revenue Agency’s rules take precedence over this text.
For further information, consult the Canada Revenue Agency website.
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