Comments on: RRSP Lifelong Learning Plan (LLP)

By: canadka

canadka — Fri, 06 May 2011 19:14:11 +0000

I plan to put 10K in RRSP. After 90 days withdraw it under LLP. It will decrease my taxable income this year by 10K. Then repay by end of the year. and do the same next year. Is it even legal? Can you suggest anything?

By: Stephen

Stephen — Sat, 03 Apr 2010 23:46:46 +0000

Heres a thought:

I have a fairly high-paying job with plenty of RRSP head-room. I plan to withdraw 10K through LLP each year, invest this money, sell existing assets, and take the proceeds from these sales to put into my RRSP.

At the end of the day, I am in exactly the same situation, except I can count off 10K worth of income this year. Or technically – defray it for 10 years, but that sounds pretty good to me too!

By: Tom @ Canadian Finance Blog

Tom @ Canadian Finance Blog — Wed, 10 Jun 2009 15:34:16 +0000

Similar to Four Pillars point, you would likely be better off with a regular withdrawal from your RRSP if you’re a full time student for the year. But if you worked for most of the year and went back to school in Sept, then it might make sense to use the LLP in that first year.

By: Four Pillars

Four Pillars — Tue, 09 Jun 2009 19:01:07 +0000

Eric – yes, that’s a good point. However, most people will never use up all their rrsp contribution room so losing a bit of room isn’t really a penalty for them.

Besides – if you don’t have any income in a year and withdraw $10k from your RRSP then you shouldn’t pay any income tax at all. I think that’s a good deal if you do something worthwhile with the money ie contribute to TFSA, pay for school, pay down mortgage etc.

By: Erick

Erick — Tue, 09 Jun 2009 18:41:46 +0000

@Four Pillars – If you just do a straight withdrawal from the RRSP, the downside would be the permanent loss of contribution room that can be recouped through the LLP.

By: Finance Guy

Finance Guy — Tue, 09 Jun 2009 17:23:51 +0000

Education has become so expensive that I would not go back unless my company offered to pay for at least part of it. Some people thing a secondary degree is a clear path to money, but they don’t understand how it could also lead to debt if you can’t find a job. When an employer offers to pay for your MBA, they’re saying that they actually need you to learn something and bring it back, and they will validate the expenses by paying for them.

By: Ms Save Money

Ms Save Money — Tue, 09 Jun 2009 16:56:51 +0000

I’m looking to go into grad school within the next couple of years and I’m hoping my company might be able to help me pay for school. In the US we don’t have a RRSP. I’ll be looking into scholarships and see if I can find my luck there.

By: Kathryn

Kathryn — Tue, 09 Jun 2009 14:43:02 +0000

I am so grateful for scholarships so we haven’t had to go this route. My spouse has a year to go to get his PhD. We would have used it if a) we didn’t have the scholarships and b) if we hadn’t cashed out our RRSP under the Home Buyers Plan.

By: Ray

Ray — Tue, 09 Jun 2009 14:08:56 +0000

I personally am always picking up new courses in different areas…….so I know that i will always need $$ for education I am still thinking of going back to school and continuing with Psychology I actually put aside money for that just in case….I use the TFSA right now for it, but as four pillars pointed out if I i stop working and go to full time school I might just withdraw from RRSP…..I think TFSA might be a better option than the LLP depending on your situation.

By: cannon_fodder

cannon_fodder — Tue, 09 Jun 2009 12:48:41 +0000

Imagine if you set up an RESP for your child(ren) and they don’t attend a qualifying post secondary school. You can transfer (except for any CESG contributions from the government) the amount into your RRSP and then fund your LLP.

So, by hook or by crook, somebody’s going to get an education!

I have thought that when I retire I might take courses at school for purely interests sake. I know that university used to offer the option to audit a course which I’m assuming would then not qualify under this program.

It wouldn’t surprise me if, during this economic hardship, there are more people investigating the benefits of returning to school to improve their skills.

By: Four Pillars

Four Pillars — Tue, 09 Jun 2009 12:40:33 +0000

If someone quits work altogether for a year or two then they are probably better off just withdrawing the money from the RRSP. The tax rate on the withdrawal money should be quite low (the actual income tax – not the withholding tax).

If you are ever in a situation where you can withdraw money from your rrsp with low to zero taxes being paid then you should think about doing it.