With the Lifelong Learning Plan (LLP), you can use your registered retirement savings plan (RRSP) to help pay for education or training if you or your spouse would like to further your studies.
When the time comes for you to pay back the money you’ve withdrawn under the LLP, you’ll need to report your repayments on your tax return. You have 10 years to repay what you’ve withdrawn. You usually have to repay at least 1/10 of the amount you withdrew each year until it is fully repaid.
You can participate in the LLP if you meet all the following conditions:
- You’re the owner of an RRSP
- You’re a resident of Canada
- You’ve enrolled, or received an offer to enroll, in a qualifying program at an educational institution as a full-time student before March of next year
- If you’ve made an LLP withdrawal in a previous year, your repayment period must not have begun
Note: You can enroll as a part-time student and use the LLP if you have a mental or physical disability that keeps you from studying full-time and you’ve submitted a signed letter from a medical practitioner to this effect, or you qualify for the disability amount for the year of the LLP withdrawal.
You can’t participate in an LLP:
- if you’ve already completed your program and are no longer enrolled
- to help pay for your children’s education or training
When do I have to start my repayments?
The Canada Revenue Agency (CRA) determines when your repayment period will start by checking if you’re a qualifying student for at least three months during the year. If you meet this condition every year, your repayment period will start in the fifth year after your first LLP withdrawal. If you don’t meet this condition for two years in a row, your repayment period will start in the second year of the two years checked by the CRA.
How do I make repayments to the LLP?
To repay the amount you’ve withdrawn from the LLP, you’ll need to contribute what you owe for the year to any of your RRSP or PRPP accounts. Make sure you specify that your contribution is an LLP repayment so it won’t be treated like a regular RRSP or PRPP contribution. If you don’t contribute to your pension plan, you’ll need to add the amount you should have repaid to your income.
How do I know how much to repay?
- Your total withdrawals
- How much you’ve repaid so far (including any additional payments and what you’ve included on your tax return because it wasn’t repaid)
- Your remaining balance
- What you need to contribute to your RRSP or pooled registered pension plan (PRPP) as repayment for next year
Even though the CRA requires that you pay back a minimum amount of your LLP balance over the course of 10 years, you can choose how much of your RRSP contributions you’d like to use to pay down your balance. If you pay back more than the amount you’re required to pay back for the year, the amount you’ll have to pay in each of the following years will be less. The LLP Statement of Account sent with your NOA will take into account any additional payments you make and will tell you how much you’ll need to repay next year.
Visit the CRA website for more information on repayments.
I’m no longer enrolled in post-secondary studies – what happens to the money I withdrew from my RRSP?
If you had to leave the program before April of the year after the withdrawal, you’ll still be able to make repayments to your RRSP over the 10-year period if less than 75% of your tuition cost is refundable by the educational institution you attended. If, however, 75% or more of your tuition is refundable, you’ll need to cancel your LLP withdrawal. If you don’t formally cancel your LLP withdrawal, the entire amount you withdrew from your RRSP will be included in your income for the year you withdrew it.
Where do I enter this?
Follow these steps in H&R Block’s 2018 tax software:
- On the QUICK ENTRY tab, click the QUICK SLIP icon. You’ll find yourself here:
- Type Lifelong Learning Plan (LLP) repayment amount in the search field and either click the highlighted selection or press Enter to continue.
- When you arrive at the page for your RRSP contributions and HBP or LLP repayments, under the Your Home Buyer’s Plan or Lifelong Learning Plan heading, select Yes to the question: Have you taken money out of your RRSP to pay for education or training, under the Lifelong Learning Plan (LLP), and do you want or need to repay some of that amount this year?
- Enter your information into the tax software.