Mike from the Quest for Four Pillars blog commented on a post I had written about the Lifelong Learning Plan. He mentioned that if he were ever considering going back to school, he would be inclined to just withdraw the money from his RRSP since that year would probably be a lower income year and the tax hit not as bad as a "full" income year.
It is an excellent suggestion. In fact, for the LLP, you almost always have to be enrolled in a full-time capacity at a qualifying educational institution. That means it is indeed likely to be a lower income year.
Add to that:
1. You no longer have to worry about what program you take and making sure it qualifies under the LLP.
2. You don’t have a set repayment schedule – you can make your repayments on your own terms, and probably in a higher tax bracket which will afford more tax refunds on your future contributions than tax paid on the withdrawal.
Perhaps this is why most people don’t use the LLP… Thanks for the suggestion Mike!
Mike and Mr. Cheap run the Quest for Four Pillars blog and I suggest you visit their site to find out where the name comes from. I’m a subscriber to their site (it’s free) and visit it daily.
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Thanks for the link and nice comments.
Another program of dubious value for adults is the RESP program which can be used for any age and starting this year, for part time studies as well. Problem is that if you are contributing as an adult, you don’t get the grants so there is very limited benefit (if any).
Bottom line is that rrsps are perfectly suited for someone who has a much lower income for a relatively short period of time such as a student.
Mike