Using your Registered Education Savings Plan (RESP)

Request an Educational Assistance Payment on behalf of the student

Once the child (the Registered Education Savings Plan (RESP) beneficiary) has graduated from high school and enrolled full-time or part-time in a qualifying post-secondary educational program, you can request, on his or her behalf, to withdraw money from the RESP to help pay for their studies.

When you withdraw government payments or interest earned from an RESP account, that money is called an Educational Assistance Payment.

Educational Assistance Payments include the interest earned in the RESP as well as any Canada Education Savings Grants, provincial grants and Canada Learning Bonds received. You can use this money to pay for post-secondary school expenses like tuition, books and transportation.

Provide required documentation to support your request

To withdraw money from an RESP, contact your RESP provider. They will ask to see official proof of enrollment before issuing the Educational Assistance Payment. They may also provide you with a list of allowable expenses that the money can be used for, or they may ask for receipts for school purchases to prove the money is being spent on allowable educational expenses.

Because they are responsible for administering the RESP in accordance with the Income Tax Act, your RESP provider determines what is considered a “reasonable” expense (i.e. one that can be paid for with the savings). Any expense that is in accordance with the Act and the terms of the plan would be considered reasonable.

One way to decide if a school expense is reasonable is to ask yourself whether or not this purchase will serve to further the student’s studies.

Special circumstances

If you need to withdraw more money than the limits allow for full- or part-time studies, your RESP provider can submit a request to the Minister of Employment and Social Development for approval. If the request is approved, the provider must then complete a request form on your behalf and submit it to the Canada Education Savings Program.

Canada Education Savings Grant lifetime limit

Educational Assistance Payments consist of earnings as well as the Canada Education Savings Grants, provincial grants and Canada Learning Bonds received. The beneficiary cannot receive more than $7,200 in Canada Education Savings Grants in his or her lifetime.

When a student receives an Educational Assistance Payment, he or she will also receive a notice detailing the amount of Canada Education Savings Grants in the payment received. It is the student’s responsibility to keep track of the amount of Canada Education Savings Grant money received; beneficiaries must repay any amount over the $7,200 limit.

Income tax considerations

Students who receive money from an RESP must claim their Educational Assistance Payment as income. Since students typically have limited income while in school, however, they may not be required to pay any income tax on this amount. This depends on individual circumstances. Your RESP provider will issue the student a T4A slip for income tax purposes.

For more details on Educational Assistance Payments, visit the Canada Revenue Agency website.

1 - Leave the money in the RESP

An RESP can be left open for up to 36 years. If your child does not continue his or her education after high school, you can keep the plan open in case he or she decides to continue past high school. Check the rules of your plan to find out if there are any more conditions.

2 - Replace the beneficiary

• In an individual plan, you may have the option of naming another beneficiary. Some rules may apply—ask your provider.
• In a family plan, you can use the earnings and certain federal and provincial grants to pay for the education of another child under the plan.
• Check with your group plan to find out if you can transfer the plan to another beneficiary without paying a fee.

3 - Transfer the money to your RRSP

You may be able to transfer up to $50,000 of earnings tax-free from the RESP to your RRSP if:

• the RESP has been open for at least 10 years;
• all beneficiaries are at least 21 and not currently continuing their education after high school;
• you have room to add money to your RRSP;
• you are a Canadian resident; and
• the rules of the plan allow it.

4 - Close the RESP

Here is what happens to the money in the RESP:

• your contributions are yours to keep. You do not have to pay tax on any contributions;
• you must return all remaining grants and bond to the Government since this money can only be used to pay for post-secondary education;
• you can get your investment earnings out of the plan if:
  • it has been open for 10 years; and
  • the beneficiaries are at least 21 and not currently continuing post-secondary education.

5 - Transfer the money to an RDSP

You may be able to transfer investment earnings from your RESP to a Registered Disability Savings Plan (RDSP) if the plans share a common beneficiary and one of the following conditions is met:

• the beneficiary of the RESP has a severe and prolonged mental impairment that can reasonably be expected to prevent the beneficiary from pursuing post-secondary education; or
• the RESP has been open for at least 10 years and each beneficiary is at least 21 years of age and is not pursuing post-secondary education; or
• the RESP has been open for at least 35 years.

The following RDSP requirements must also be met at the time the rollover is made:

• the beneficiary is eligible for the Disability Tax Credit;
• the beneficiary is less than 60 years of age in the year the rollover is made;
• the beneficiary is a resident of Canada;
• the rollover amount cannot cause the RDSP to exceed the lifetime contribution limit of $200,000; and
• the plan must not be a Specified Disability Savings Plan.

When RESP investment earnings are rolled over to an RDSP, the RESP must be closed before March of the year following the year of the rollover. In addition, the remaining Canada Education Savings Grant, Canada Learning Bond and provincial incentives must be repaid. Contributions in the RESP will be returned to the RESP subscriber.

For more information on rolling over education savings to an RDSP, see RDSP Bulletin No. 4 or call 1-800-959-8281 (TTY users call 1-800-665-0354).

Ask your provider for details and restrictions.