InfoCapsule : Plan termination

Disclaimer: RESP promoters

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

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14. Plan termination

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

1: Stop automated payments

Promoters should first consider stopping any pre-authorized contributions or any other type of automated payment from being made to the RESP.

2: Stop 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) with the "grant request" field set to "0" or "no", for each beneficiary with an active CLB request in the RESP.

3: Contribution withdrawals

If there are contributions remaining in the RESP, the promoter must submit a contribution withdrawal through a repayment transaction (400-21) with repayment reason "01" as a contribution withdrawal, even if the repayment amounts are zero for the Canada Education Savings Grant (CESG) and the Saskatchewan Advantage Grant for Education Savings (SAGES).

4: Repayment of incentives

Any remaining incentives administered by ESDC in the RESP must be repaid to ESDC using the specified repayment reason(s). Appendix G of the RESP provider user guide lists 12 potential repayment reasons and offers guidance on the repayment process based on different situations.

5: When there are losses in the plan

A termination adjustment transaction (400-22) must only be used when an RESP is terminated and when investment losses prevent the full repayment of all education savings incentives.

6: Distribution of earnings

Earnings can be paid to a qualified subscriber by submitting a repayment transaction (400-21) with repayment reason "02" as an accumulated income payment (AIP) that may also be rolled over into another qualified registered product, or with repayment reason "06" as a gift to a designated educational institution.

7: Report the termination

All plan terminations must be reported to ESDC by submitting a repayment transaction (400-21) with repayment reason "03". Any remaining incentives administered by ESDC must be repaid using this transaction even if the repayment amount is zero.

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