Congratulations! It's exciting to hear your beneficiary is ready to start taking advantage of your RESP investments for their education.
If you are considering withdrawing funds from your RESP, it's essential to understand the rules and requirements to avoid taxes, penalties, and other potential issues. Below is more information for your reference.
Withdrawal Eligibility
To be eligible for RESP withdrawals, you or your child must be enrolled in a qualifying educational program.
If you do not meet these eligibility requirements - or request to withdraw from your RESP for purposes other than education - you may be subject to taxes and penalties.
Types of Withdrawals
Withdrawals for post-secondary education are available in 2 forms:
- Educational Assistance Payment (EAP) whereby funds can be withdrawn to the beneficiary only but, amounts withdrawn can include grants paid on contributions. These amounts are taxable to the beneficiary. However, since those beneficiaries mostly have little or no income, it will typically result in very little or no taxes.
- Post-Secondary Educational Capital Withdrawal (PSE) whereby funds can be withdrawn to either the subscriber or beneficiary but, cannot include grants paid on contributions.
Please note that RESP withdrawal requests that are not made toward a beneficiary's education would be considered a Non-Educational Capital Withdrawal (NCW) - meaning that government grant contributions would be returned; your contribution room would not be returned; and, you may not be eligible to receive the same amount of grants in the future..
RESP Withdrawal Process
When you’re ready to withdraw from your RESP, you will need to prepare and provide the following to our support team:
- A completed RESP Withdrawal Form for each withdrawal you wish to make in your RESP account.
- A copy of a void cheque or direct deposit information for payment instructions. If an EAP withdrawal is being made, a void cheque must be provided for a bank account in the beneficiary's name.
-
A letter from the post-secondary institution (with name and address) stating the student is enrolled in a full or part-time program. The letter must be SIGNED and STAMPED by the post-secondary institution.
OR
A copy of the OFFICIAL course schedule AND valid student identification card (double sided copy).
Depending on the type of RESP withdrawal request you make, you may receive less than what you requested because certain portions of your account can be returned. For example, if you make a Non-Educational Capital Withdrawal (NCW), the government contribution grants you received in your account are returned to the government. Note: you may not be eligible to receive the same amount of grants in the future following this, as your contribution room is not returned.
Please note that:
- Only the main account holder can make one-time or recurring withdrawals.
- Funds that were received as Government grants or gained as investment income can only go to the beneficiary; and, are subject to tax when withdrawn.
- If you or your child decide to go to an eligible educational institution part-time rather than full-time, the recipient can receive up to $2,500 per 13-week semester if they complete at least 12 hours of coursework per month.