InfoCapsule 14: Plan termination

On this page

• List of acronyms
• Preface
• 1. Stop automated payments
• 2. Stop Canada Learning Bond request
• 3. Contribution withdrawals
• 4. Repayment of incentives
• 5. When losses occur in the plan
• 6. Distribution of earnings
• 7. Report the termination

Alternate format

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

Preface

Promoters may need to report multiple repayment transactions with different repayment reasons, within the same processing month. This depends on how the money in the Registered Education Savings Plan (RESP) is distributed when an RESP is terminated. When terminating a plan, promoters are recommended to follow the process below, in the suggested order. This is to help prevent any possibility of funds being paid into an otherwise closed RESP.

1. Stop automated payments

Promoters should first consider stopping any:

• pre-authorized contributions
• other types of automatic payment made to the RESP

2. Stop Canada Learning Bond request

If the RESP is set to receive the annual Canada Learning Bond (CLB) payments:

• the promoter must submit a CLB request transaction (400-24) for each beneficiary with an active CLB request:
  • in each transaction, the "grant request" field should be set to "0" or "no”

3. Contribution withdrawals

If any contributions remain in the RESP, the promoter must submit a contribution withdrawal through a repayment transaction (400-21). They must use repayment reason "01" (contribution withdrawal).

4. Repayment of incentives

Any remaining incentives administered by Employment and Social Development Canada (ESDC) in the RESP must be repaid to ESDC using the specified repayment reason(s). Appendix G. Registered Education Savings Plan provider user guide – Understanding repayments lists 12 potential repayment reasons and offers guidance on the repayment process based on different situations.

5. When losses occur in the plan

Use a termination adjustment transaction (400-22) only when:

• terminating an RESP
• investment losses prevent the full repayment of all education savings incentives

6. Distribution of earnings

Earnings can be paid to a qualified subscriber as an accumulated income payment (AIP). To do so, the promoter must submit a repayment transaction (400-21) to the Canada Education Savings Program (CESP) system and use repayment reason "02".

An AIP may be rolled over into another qualified registered product. Also, with a repayment reason "06" as a gift to a designated educational institution.

7. Report the termination

Submit a repayment transaction (400-21) with repayment reason "03" to report all plan terminations to ESDC. Use this transaction to repay any remaining incentives administered by ESDC, even if the repayment amount is 0.