Withdrawal from personal RSP under LLP and contributing towards spousal RSP
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Posted on: 19-01-15 13:04:46
If I am eligible to withdraw funds from my personal RSP account using the LLP (Lifelong Learning plan) option (because me or my spouse is a full-time student), can I withdraw from my own RSP account and use the funds to contribute into spousal RSP account to take tax deduction advantage for the current tax year? The money I withdraw from LLP needs to be re-paid in 10 years starting after 4 years from the withdrawal date.
Plus I can also take those money out from spousal RSP at low tax rates in the future when the spouse is not working (on maternity/paternity leave)
Does it make sense ?
Is it a good idea ? Or do you see any problem ?
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/llp-reep/menu-eng.html
Thank you for your time in advance.
Quote:
Originally posted by jigz787
If I am eligible to withdraw funds from my personal RSP account using the LLP (Lifelong Learning plan) option (because me or my spouse is a full-time student), can I withdraw from my own RSP account and use the funds to contribute into spousal RSP account to take tax deduction advantage for the current tax year? The money I withdraw from LLP needs to be re-paid in 10 years starting after 4 years from the withdrawal date.
Plus I can also take those money out from spousal RSP at low tax rates in the future when the spouse is not working (on maternity/paternity leave)
Does it make sense ?
Is it a good idea ? Or do you see any problem ?
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/llp-reep/menu-eng.html
Thank you for your time in advance.
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You should borrow at a low interest and deposit the amount into the Spousal RRSP, that would be my tax tip to you.
Any amount you withdraw from your own RRSP, over and above the required amount called for or permitted by LLP, will be additional burden upon you and anything over $20,000 will hit you with taxes. for the current year. (It might be nil or negligible amount.)
A recent victim of recession, due to layoffs, asked me if "I should use the Lifelong Learning Plan provision of RRSPs to pay for tuition when going back to school on a full-time basis." I immediately responded to it by telling "that pretty much no one else uses that program, and you shouldn't either".
The HBP and the LLP – If your spouse or common-law partner participates in the HBP or LLP, you may not be able to deduct, for any year, all or part of the contributions you made to your spouse's or common-law partner's RRSP during the 89-day period just before your spouse or common-law partner withdrew an amount under either of these plans. To determine the part of the contributions you made to your spouse's or common-law partner's RRSP that you cannot deduct, go to Home buyers' Plan (HBP) or see Guide RC4112, Lifelong Learning Plan (LLP), whichever applies.
ALTERNATELY...: Talk with the Institution that holds your RRSP's and ASK THE SAME QUESTION that you are posting to us here. They are OBLIGATED to do it for you and advise you with exact requirements. If you write to them and ask and you get a response back, then you have a very neat paper trail, upon which you can rely. What we say here does not hold water, in any court of law.
FORM..: ( DO NOT USE) http://www.cra-arc.gc.ca/E/pbg/tf/rc96/rc96-14e.pdf
Please Read. : http://www.td.com/to-our-customers/tdhelps/#psce%7Ccid=871%7Clid=1%7Ctid=001%7Cvid=b082e0a52
http://www.mondaq.com/canada/x/288860/Income+Tax/Three+Smart+Ways+to+Tap+into+Your+RRSP
Hope this helps.
FH.
No your answers are not helping, but thanks anyways.
I already did a bit of homework on my side, I already read the globe and mail article about "NOT ONE USES LLP" I am not sure why did you copy-paste "A recent victim of recession...." paragraph. It doesn't apply me.
Also, I am not sure why my RSP institute will answer my question. I am not asking about any rules and regulations.. Why would the institute answer about my personal financial situation ? I just asked for opinions from tax expert CD members.
I don't know if you have heard of Preet B... I receive his RSS feeds and when I hit LLP I get his response in my e-mail & RSS feeds. If it also appears anywhere else, it confirms my findings in my e-mail. I don't have to go searching for authentic answers.
Knowing what has been said in his RSS feeds, you should refrain from it. Yes, you do have a choice. So, it is upto you to do as you please. Your situation might be different to the one posted in the web, if you wish to explain here you still have a lot of room under this posting. We are all eyes and ears.
First item, that I should ask you is have you reached the $20,000 limit.? That will drag out all your finances into this website. To avoid this, I told you to contact the Institution that holds your RRSP Funds. They are not only mangers of your RRSP Funds and take care of it, they are also your Financial advisers. They should provide you with an answer when you write to them and ask.
In your NOA, (Notice of Assessment) received from CRA (Canada Revenue Agency) last year, you will know exactly what your contribution limits are. My next question to you would be, can you tell me what are the limits that you got from your NOA received from your Last years' return. Once again, I will be exposing your finances here on CD. I wish to avoid it if at all I can.
The next question to you would be, What are your anticipated income for the year 2015, yours and your spouses, each of you? That will once again will expose your finances here for this year 2015.
I can help you right from the bottom upto your tax filing on 30th of April of this year, for the last year, 2014. But your withdrawal under LLP and ploughing the sum back into your Spousal RRSP, so withdrawn through LLP, will enter into the NEXT Years' income, that is if you have exceeded the $20,000 limit, for which I will need you to answer a few more questions and drag out a lot more financial situation of yours into the open. Are you ready for it.?
DO YOU think it is fair for me to do it on an open website. I don't think so. BUT..You are free to answer as it is your choice.
I only do my taxes and I am able to manage my affairs all by myself. I don't consider myself a TAX EXPERT, but I sure do have a good grasp of it and I can help who so ever comes here asking a decent question about taxation, and then some.
You are a very difficult person and you have your own difficulties and my answers did not help any, so leave it at that.
FH.
Yes, you are right.
I shall wait for others to answer.
And what 20 K limit are you talking about ? This is first time I am thinking about taking advantage of LLP..... So take a guess
Quote:
Originally posted by jigz787
Yes, you are right.
I shall wait for others to answer.
And what 20 K limit are you talking about ? This is first time I am thinking about taking advantage of LLP..... So take a guess
-----
Quote:
Originally posted by jigz787
Yes, you are right.
I shall wait for others to answer.
And what 20 K limit are you talking about ? This is first time I am thinking about taking advantage of LLP..... So take a guess
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You did not read my previous post, one above this... did you? If you did then you will not be asking even this question also.
From the LINK posted to you....
"Hi MC,
Thanks for reaching out to us at TD Helps.
The Lifelong Learning Plan (LLP) allows you to withdraw amounts from your RSP to finance eligible training or education for you, your spouse or your common-law partner. You do not have to include the withdrawn amount in your income, and there is no withholding tax on these amounts.
You may withdraw up to $10,000 each year under this program for qualified education expenses. The maximum lifetime withdrawal amount is $20,000 over a period of no more than four years.
These withdrawals must be repaid to your RSP over a period of no more than 10 years. Any amount that you do not repay when it is due will be included....."
Hey I tried. Give me an "A" for trying.
FH.
Wow... you are sodesperate to increase your number of posts or you are always like this ...? 
I guess you did not read my very first post. If I had used LLP in the past then why would I ask the question now ? which should clearly mean I have never used any LLP limits in the past.
I already know the rules of LLP and there was nothing new on TD website neither I learned anything new from your posts.
Well.... its helping me to keep my post on the top so others can comment 
Hoping for better answers from others.
