InfoCapsule 3: Life cycle of a Registered Education Savings Plan

From: Employment and Social Development Canada

Disclaimer - RESP promoters

The information contained on this page is technical in nature. It is intended for Registered Education Savings Plan (RESP) and Canada Education Savings Program promoters. For general information, visit the RESP page.

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A PDF version of the InfoCapsules for RESP providers is available on the index page.

List of acronyms
AIP
Accumulated income payments
CESP
Canada Education Savings Program
CRA
Canada Revenue Agency
EAP
Educational assistance payments
ESDC
Employment and Social Development Canada
RESP
Registered Education Savings Plan

Preface

The life cycle of a Registered Education Savings Plan (RESP) can be broken down into 3 phases.

Phase 1: Setting it up

  • The subscriber selects an RESP promoter, opens an RESP and names a beneficiary
  • The promoter gathers information on the contract, the beneficiary and the subscriber
  • The subscriber signs a contract with the promoter and chooses how to invest their funds
  • The subscriber, with the promoter, completes the appropriate application form to request the education savings incentives for which the beneficiary may be eligible
  • The Canada Revenue Agency (CRA) registers the plan
  • Within 90 days, the promoter informs the beneficiary’s custodial parent or legal guardian that a plan was established

Phase 2: Making it grow

  • The subscriber may contribute to the RESP in respect of a beneficiary
  • The promoter submits RESP transactions to the Canada Education Savings Program (CESP) system
  • The RESP may receive education savings incentives
  • Contributions and education savings incentives in the RESP may generate earnings
  • At least once a year, the promoter must inform subscribers, in writing, on the status of their RESP account
  • The custodial parent coordinates the contributions with subscribers to avoid overcontributions
  • The custodial parent has access to information on all RESPs held by Employment and Social Development Canada (ESDC) for their child

Phase 3: Taking out the funds

For post secondary education

  • The promoter must obtain the beneficiary’s proof of enrolment to issue an educational assistance payment (EAP)
  • The subscriber may request an EAP
  • The subscriber may withdraw their contributions as a post secondary contribution withdrawal

When terminating a Registered Education Savings Plan

  • Education savings incentives administered by ESDC that remain in the plan must be repaid
  • Contributions are returned to the subscriber, tax free
  • The options available to disburse the remaining earnings in the RESP are to:
    • request an accumulated income payment (AIP)
    • rollover the AIP amount into another qualified registered product
    • make a payment to a designated educational institution in Canada

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