RESP Withdrawals: 6 Things to Consider

Last updated: September 2023

Congratulations! You've done all the hard work of saving and investing for your child's post-secondary education and the time has finally arrived to tap into those funds. There are, however, a few rules as to how and when you can withdraw money from a Registered Education Savings Plan (RESP).

Here are some general tips that can help you when it comes time to put that RESP to use.

1. Do have proof of enrollment

To withdraw money from an RESP, you'll need documentation showing that your child is enrolled in an eligible post-secondary institution, such as a university, college or apprenticeship program. Eligible institutions can include schools outside of Canada. Once you have proof of enrollment, which can be requested from the school, you can access the RESP funds. You can find the withdrawal form here.

Fast Fact: RESP money can be used for tuition, accommodation, books or any other expense related to your child's post-secondary education.

2. Don't forget to indicate the type of withdrawal

Funds within an RESP are divided into two categories. The first is the money you've contributed (called a Post-Secondary Education Payment, or PSE), which can be withdrawn tax-free. The second category (called an Educational Assistance Payment, or EAP) is the grant and/or bond money received from the government, as well as any investment earnings accumulated on the contributions and grants. It's this category that's taxable. A T4A will be issued at the end of the calendar year in the name of the RESP beneficiary (a.k.a., the student) for EAP withdrawals.

Fast Fact: Both in-kind and cash withdrawals are allowable from an RESP.

3. Do be aware of withdrawal limits

For students enrolled in a full-time program, there's a limit of $8,000 on EAP withdrawals during the first 13 weeks of a program. Once those 13 weeks are up, there's no limit on additional EAP amounts that can be withdrawn. However, the maximum rule will apply again if a student takes a break and isn't enrolled for 13 consecutive weeks within any one-year period. For part-time studies, EAP withdrawals are limited to $4,000 for every 13-week period of enrollment.

Fast Fact: There are no limits placed on PSE withdrawals.

4. Do consider tax implications

EAP withdrawals are taxable in the hands of your child. Since many students have little or no other income, they will usually pay little or no income tax on EAP withdrawals.

Fast Fact: T4A tax slips for EAP withdrawals are issued in the student's name.

5. Do pay attention to remaining EAP amounts

You'll want to keep an eye on the level of EAP funds remaining in the RESP. If there are EAP funds still in the RESP when the account is closed, any portion that was grant or bond money will have to be repaid to the government. As for investment earnings, you may be able to transfer them to a registered account in your name, for example a Registered Retirement Savings Plan (RRSP), if you have available contribution room. Those investment earnings could also be withdrawn as taxable income. When investment earnings are paid out to plan subscribers (the person who opened the RESP), it's known as an Accumulated Income Payment, or AIP.

Fast Fact: With an individual RESP plan, you may be able to name another beneficiary if your child doesn't end up going to school. With a family RESP plan, you may be able to direct any government grants and earned income to another beneficiary. Family RESPs are shared plans. If one beneficiary doesn't pursue post-secondary education, the other beneficiaries can use the funds. However, each beneficiary can only withdraw the maximum of $7,200 from the grant portion.

6. Don't feel rushed

RESPs can stay open for 35 years after the account is created, so there's some flexibility to take a wait-and-see approach if your child doesn't pursue post-secondary education right away. Similarly, if money remains after your child finishes school, it's possible they may need further financial assistance down the road for a post-graduate program.

Fast Fact: Contributions can be made to an RESP for 31 years after being opened — up to a lifetime contribution limit of $50,000 per beneficiary.

To find out more about RESPs, check out:

9 Common RESP-Related Questions & Answers and Playing Catch-Up With RESPs