Lifelong Learning Plan (LLP): How It Works in Canada

Continuous education is becoming increasingly critical for career success and lifelong employability. With rapidly evolving job demands, even mid-career professionals require ongoing training and skills upgrades. However, finding the money to pay for continuous learning can be challenging. This is where Canada’s Lifelong Learning Plan (LLP) can help.

The LLP allows Canadians to strategically leverage their existing Registered Retirement Savings Plans (RRSPs) to fund full-time education and training tax-free. The withdrawn funds are then repaid over a 10-year period without accruing interest.

By temporarily tapping into their retirement nest eggs, professionals of all ages can develop new skills to maximize their employability and income potential throughout their careers.

What is a Lifelong Learning Plan?

The Lifelong Learning Plan (LLP) is a government program that allows Canadians to withdraw funds from their RRSPs to pay for full-time training or education for themselves or their spouse/common-law relationship.

The LLP essentially functions as an interest-free loan from yourself, enabling you to use your retirement savings to fund your education now and pay it back later. The withdrawn funds are not taxed if you meet the eligibility criteria.

The LLP provides flexibility in funding education using private savings. It can supplement or offset the costs of tuition, textbooks, commuting, and other expenses. Using pre-tax retirement funds strategically in this manner enables Canadians to advance their skills and career opportunities.

The downside of this approach is that there is a risk your income tax rate could be higher in retirement than when you made the withdrawals, resulting in a larger tax bill on the amounts later on. Careful projecting of future income and tax brackets is advisable.

Who can use the Lifelong Learning Plan?

To use the Lifelong Learning Plan in Canada, you must:

• Be a resident of Canada
• Have an eligible RRSP from which to make withdrawals
• Be enrolled in, or have received an offer to enroll in, a qualifying educational program

There are no age restrictions on participating in the LLP. However, you cannot make withdrawals in or after the year you turn 71, when RRSPs must be converted into Registered Retirement Income Funds (RRIFs) or annuities.

Can you use the LLP for a child’s education?

No, the LLP cannot be used for the education of your or your partner’s child. It is strictly for full-time programs for yourself or your spouse/partner. If you want to save for your child’s education, you should consider opening a Registered Education Savings Plan (RESP) instead. RESPs allow tax-deferred growth and Government Educational Assistance Payments to help your savings grow faster.

What educational programs qualify for the LLP?

To qualify under the LLP, you must be enrolled full-time in a program at a designated educational institution. What constitutes full-time enrollment can vary based on how the institution defines it.

Qualifying programs include:

• Degree, diploma, or certificate programs at universities, colleges, CEGEPs, or trade schools.
• Professional association programs leading to a professional status or designation, such as CPA, CFA, PMP, etc.

The educational institution must be:

• A university, college, or trade school recognized by Employment and Social Development Canada (ESDC)
• A professional association recognized by ESDC
• An educational institution in Canada certified by the Minister of Employment and Social Development to offer non-credit courses that develop or improve skills in an occupation.

People with disabilities can qualify for the LLP based on part-time enrollment.

How Does Lifelong Learning Plan Withdrawal Work?

Using the Lifelong Learning Plan to access your RRSP funds requires following specific procedures and guidelines when making withdrawals. Certain types of RRSPs, including locked-in RRSPs, Pooled registered pension plans (PRPPs), and specified pension plans (SPPs), do not allow LLP withdrawals. LLP withdrawals are only permitted from regular self-directed RRSPs.

How much can you withdraw with the LLP?

You can withdraw up to $10,000 per calendar year through the LLP, up to a lifetime maximum of $20,000. Any excess withdrawn will be taxed as RRSP income for that year.

The LLP withdrawal eligibility period lasts up to 4 years after the first withdrawal, as long as you remain enrolled in a qualifying program. For example:

• If you made your first LLP withdrawal in 2025, you could make additional eligible withdrawals until January 2029.
• If your first withdrawal was $11,000, you could withdraw another $9,000 in a later year.

Step-by-step process for making a LLP withdrawal

To make an LLP withdrawal from your RRSP, you will need to:

Step 1: Obtain Form RC96, Lifelong Learning Plan (LLP) Request to Withdraw Funds from an RRSP, from the CRA website or your financial institution.

Step 2: Complete Part 1 of RC96 identifying yourself or your spouse/partner as the LLP student.

Step 3: Submit the form to your RRSP issuer. They will complete Part 2 and process the withdrawal from your RRSP.

Step 4: The issuer reports the amount withdrawn on your T4RSP tax slip. You must attach this to your annual income tax return.

Step 5: Report all LLP withdrawals each year on Schedule 7 of your tax return until fully repaid.

How do LLP withdrawals affect your RRSP deductions?

LLP withdrawals can impact your ability to claim deductions for RRSP contributions made in the same year:

• Contributions made 90 days before an LLP withdrawal may not be fully deductible.
• You calculate the non-deductible amount based on the value of your RRSP before and after the withdrawal.
• Contributions made after an LLP withdrawal remain fully deductible.

What happens if LLP students leave the educational program?

To retain LLP eligibility after withdrawing funds, students must generally remain enrolled in their programs until at least the end of March of the following year. If you leave sooner, what happens depends on the educational institution’s tuition refund policy:

• If less than 75% of tuition is refundable, you can still keep LLP status and repay over 10 years.
• If 75% or more is refundable when the student leaves, you must cancel the LLP withdrawal that same year.

Cancelling an LLP withdrawal

Situations when you must cancel an LLP withdrawal include:

• The student does not enroll in the program on time.
• The student leaves the program early, and at least 75% of the tuition is refundable.
• You become a non-resident before December 31 of the withdrawal year.

To cancel, you must:

• Repay the full withdrawn amount to any of your RRSPs.
• Submit Form RC97 to the CRA to identify the reason for cancellation.
• Provide supporting documentation, such as proof of non-residency.

If you do not cancel when required, the withdrawn amount will be taxed as income.

When do you have to repay your RRSP?

Under the LLP, you have up to 10 years to fully repay the amounts withdrawn. You must repay at least 10% of the balance each year, starting in the year following your first withdrawal.

If you miss a repayment, the shortfall will be taxed as income for that year. The Canada Revenue Agency will track repayments and notify you annually of your required repayment amounts.

Can you participate in both LLP and Home Buyers’ Plan?

Yes, you can participate in the Lifelong Learning Plan even while you have amounts outstanding under the Home Buyers’ Plan (HBP). The HBP allows first-time home buyers to withdraw up to $35,000 from their RRSPs to purchase or build a home.

You can make LLP withdrawals while repaying your HBP and vice versa. The same RRSP can simultaneously contain outstanding balances owed under both programs.

The key is to keep track of your required repayments under both plans each year and budget accordingly. An RRSP contribution can be allocated to repaying either program.

What are alternatives to the LLP for education funding?

While the LLP can be useful, it is not your only option for funding education or training using your existing savings:

• Direct RRSP withdrawal – You can withdraw from your RRSP at any time and pay taxes on the amount withdrawn. This permanently uses RRSP contribution room but avoids the LLP’s repayment requirement.
• Tax-Free Savings Account (TFSA) – Withdrawals from TFSAs face no tax implications, and contribution room will be restored next year. But contribution limits are lower than RRSPs.
• Self-directed RESP – You can open an RESP for yourself and benefit from tax-deferred growth. But you don’t get government grants, and there are restrictions on what the funds can be used for.

Each approach has pros and cons. Consulting with a financial advisor can help you identify the most strategic education funding plan for your needs.

FAQs related to Lifelong Learning Plan

The Bottom Line

Taking advantage of programs like the Lifelong Learning Plan requires careful planning and attention to detail. The application process, tax implications, and long-term considerations around repaying your RRSP can be complex.

Before withdrawing funds from your RRSP, it is highly recommended that you consult with financial professionals. They can explain the mechanics of the LLP, verify your eligibility, and process the necessary withdrawals and forms.

With proper understanding and planning, the Lifelong Learning Plan can be a strategic way to fund continuous learning while minimizing the tax consequences.