HOW TO WITHDRAW RESP?: Registered Education Savings Plan which is commonly known as RESP is a tax-free investment which can be accessible only by the Beneficiary child. The RESPs can be withdrawn at any time and due to any reason. There are specifically two types of withdrawal rules as given follows:


  • When a Beneficiary wants to withdraw his/ her money from the RESP account so as to suffice the educational costs.
  • When the subscriber (the person who had set up the plan) decides to terminate the RESP account as the beneficiary does not intend to pursue post-secondary education.

When your child is going to post-graduate school, the withdrawal from an RESP account is classified into two types:

Post-Secondary Education Payments (PSE):

Post-Secondary Education Payments are those types of payments in which the money is taken from a part of the contribution amount of the RESP account. These are taxable payments. Once the child is in post-secondary education, there are no such limitations or boundaries to the contribution amount which can be withdrawn.

Education Assistance Payments (EAP):

Now, these payments come from the non-contribution part and are also taxable like PSE payments. The payments are given in the hands of the student. EAP payments have no withholding taxes.

It is to be noted that, in the first thirteen weeks of school, an amount of only $5,000 can be withdrawn from the non-contribution portion of the account. After thirteen weeks, the withdrawal can be of any amount.

While withdrawing funds from RESP, the financial institutions should be reported how much of the withdrawal amount should be from contribution (PSE) and non-contribution amount (EAP) respectively.

There are certain situations where handling with these withdrawal types can result in the lowering of taxes of students. Some particular tax issues to be very aware of are the co-operative education and the summer job before post-graduation education. The former occurs when the student is in a co-operative program and is occupied with two work terms in one calendar. As a result, the income becomes high enough to be liable for paying taxes. Whereas, the later situation is introduced when the student completes a short summer job of approximately two months before starting the post-graduate course. In such a case, it is preferred to withdraw the extra EAP to take the benefits of the personal exemption and also tuition credits.

Among the various queries, one of the most significant ones is that if your child doesn’t attend post-secondary education. In such a case, all your savings will be refunded at maturity. The government grants will be returned back to the government. Other alternatives to such problems are:

  • Transferring the RESP to some another beneficiary.
  • Requesting an Accumulated Income Payment (AIP).
  • Transferring the gathered income to your Registered Retirement Savings Plan (RRSP).

Though withdrawal of RESP can turn up to be tricky, if you have an idea about the detailed methods of withdrawal as provided above; you will be able to acknowledge an optimal strategy to withdraw your respective money.


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