RESP | Frequently Asked Questions FAQs

Do I need to provide a Social Insurance Number (SIN) for each beneficiary of an RESP?

Yes, a SIN is required for each beneficiary to open an RESP. Employment and Social Development Canada (ESDC) tracks all information related to contributions, grants, and payments using the beneficiary’s SIN.

What is the contribution limit for an RESP?

The lifetime contribution limit is $50,000 per beneficiary. There is no annual contribution limit, but contributions do not qualify for the Canada Education Savings Grant (CESG) after the year the beneficiary turns 17. If multiple plans are opened for the same beneficiary by different subscribers, the combined contributions across all plans must not exceed $50,000.

When do contributions to an RESP need to stop?

Contributions to an individual plan must stop at the earliest of the following:

31 years after the year the RESP was opened.
If the plan was transferred, 31 years after the year of the earliest effective date of the transferring plan.

For a family plan, contributions for a beneficiary must stop at the earliest of:

The year the beneficiary turns 31.
31 years after the year the RESP was opened.
31 years after the year of the earliest effective date of any transferring plan.

How do contribution limits affect CESG eligibility?

The CESG applies to the first $2,500 of contributions per beneficiary per year, with a maximum grant of $500 per year. If no contributions are made in a given year, the ability to claim CESG for missed years carries forward. The maximum amount of CESG that can be received in any one year is $1,000. The lifetime maximum CESG per beneficiary is $7,200.

What happens if the subscriber over-contributes to an RESP?

An over-contribution occurs when contributions exceed the $50,000 lifetime limit per beneficiary. In such cases:

A 1% monthly penalty tax is applied to the subscriber’s share of the excess amount until it is withdrawn.
Excess contributions can only be withdrawn without repaying CESG if the withdrawal corrects an excess of $4,000 or less or if the beneficiary is eligible for an Educational Assistance Payment (EAP).

Do contributions to an RESP belong to the subscriber or the beneficiary?

Contributions belong to the subscriber. However, the subscriber can choose to have these amounts paid to the beneficiary, either directly or indirectly. The subscriber also retains control over trading assets within the RESP.

What are the implications of withdrawing contributions from an RESP?

The subscriber can withdraw contributions at any time without tax consequences. However:

If the beneficiary is enrolled in a post-secondary program, contributions can be withdrawn without repaying CESG.
If contributions are withdrawn before the beneficiary pursues post-secondary education, the CESG amount associated with the withdrawal (typically 20%) must be repaid to ESDC.
If unassisted contributions (made before 1998) are withdrawn, no future CESG can be received for contributions made that year and in the following two years.

What is a qualifying educational program for an RESP?

A qualifying educational program is a post-secondary school-level program that usually provides credits toward a degree, diploma, or certificate.

For full-time programs: At least 10 hours of instruction or work per week for a minimum of three consecutive weeks.
For part-time programs: At least 12 hours of instruction per month for a minimum of three consecutive weeks.

What is considered valid proof of enrollment?

Valid proof of enrollment must include the following information:

Name of the beneficiary (student).
Name of the educational institution.
Semester (fall, winter, or summer).
Student’s status (full-time or part-time).

An admission letter or confirmation of acceptance does not qualify as valid proof.

What tax slips are issued for RESP transactions?

Educational Assistance Payment (EAP): No withholding tax, but taxable income for the beneficiary. A T4A is issued at year-end.
Non-resident beneficiary: A 25% withholding tax applies, unless a lower rate is permitted by a tax treaty (NR301 is required). An NR4 slip will be issued.
Capital Withdrawal (PSE): No tax slip is issued.
Accumulated Income Payment (AIP): Taxable income for the subscriber with an additional 20% tax. A T4A slip is issued at year-end.

What happens if the beneficiary of an RESP does not pursue post-secondary education?

If the beneficiary does not pursue post-secondary education, the subscriber has the following options:

Change the beneficiary: The subscriber may designate another beneficiary.
Recover the capital: The subscriber can withdraw the original contributions without penalty.
Return the grants: All CESG amounts must be returned to the government.
Withdraw accumulated income: The subscriber may receive an Accumulated Income Payment (AIP), subject to regular income tax and an additional 20% tax. The tax can be reduced by transferring up to $50,000 to the subscriber’s RRSP or their spouse’s RRSP if contribution room is available. Alternatively, the income can be given to a designated educational institution as a gift (not considered a donation for tax purposes).

What happens if the beneficiary of an RESP dies?

If the beneficiary dies, the subscriber has two options:

Close the plan: Contributions can be withdrawn, but grants must be repaid.
Designate a new beneficiary: If the new beneficiary is a sibling of the deceased beneficiary and under 21, or if both beneficiaries are related by blood or adoption to the original subscriber and under 21, the grants will remain unaffected.

Note: The contribution history of the deceased beneficiary may be attributed to the new beneficiary, which could impact contribution limits and lead to penalty taxes if exceeded.

What happens when the beneficiary of an RESP is deceased?