Withdrawing from an RESP account

Learn the intricate details of RESP withdrawals and how to submit a Request

Taking money out of an RESP

Money in a Registered Education Savings Plan (RESP) can come from many sources:

• Contributions from the subscriber and/or others
• Benefits received, like the Canada Learning Bond (CLB), Canada Education Savings Grant (CESG), and/or provincial benefits
• Interest accumulated on the money in the RESP

Because of these different sources of money in an RESP, there are different ways to withdraw.

1. Post-Secondary Education Payments (PSE)
The PSE is your contributions to the RESP and can be withdrawn tax-free. There is no limit to how much can be withdrawn at a time.

2. Education Assistance Payment (EAP)

The EAP is everything else and comprises investment income, capital gains and government grants/bonds earned in the RESP. The EAP is taxed on the student. Again, with your child’s low income and available tax credits, withdrawing from EAP may help reduce taxable income.

A withdrawal of contributions can be requested by the RESP subscriber. The contributions can be taken out of the RESP tax-free and returned to the subscriber. The subscriber may choose to give these funds to the beneficiary. For example, a subscriber could request a withdrawal of contributions if they have no longer received any benefits in their RESP.

If interest in the RESP is not used by the beneficiary through an EAP, accumulated interest can be paid out on its own. This is called an Accumulated Income Payment (AIP) and is usually paid to the subscriber. It is taxed at the regular income tax rate of the subscriber, plus an additional 20% (or 12% for subscribers residing in Quebec).

For more information, consult the section about taking money out of an RESP from the Canada Revenue Agency.

How to use the RESP to pay for education

You can use the money in the RESP to pay for education right away or keep it for future education. The beneficiary can use the EAP money to pay for expenses like tuition, books, tools, transportation, and rent.

To receive an EAP and pay for education:

• the beneficiary must enroll in full- or part-time studies at an eligible school (in Canada or abroad). Programs must meet the minimum weeks of study and hours per week to be eligible
• the beneficiary must provide proof of enrolment

Track the CESG amounts you use for education

When a beneficiary receives an EAP, they will also receive a notice detailing the amount of the CESG in the payment received. The beneficiary cannot receive more than $7,200 from the CESG in their lifetime. It is their responsibility to keep track of the CESG amount received; beneficiaries must repay any amount over the $7,200 limit.

If you don’t use the RESP for education

You have 4 choices:

• keep the RESP open and leave the money in it for future studies
• replace the beneficiary
• transfer the money to other registered savings plans
• close the RESP

How to submit the request

Search for client contact in the HubSpot Search bar, open the client contact card, and find the client’s CRM Contact record page.

Start by navigating into the Servicing (Service Request) tab from the client's contact record, which is found in the middle panel of the contact record.

Then click on Cash and Security Management.

Step 1: 

• Select Withdraw

 

Step 2:

Specify the Request Type. The four request types are:

• Eft-Out
• Withdraw to Investment Account 
• Send Cheque to Address
• Send Cheque to Third party

Step 3:

• The second property you will be asked to specify is the From Account. 
• Select the RESP

 

Step 4:

• Since the RESP account is a registered account, an Offset account must be selected, this is typically the associated cash account.
• If you select withdraw to an investment account, select the To account. 

Step 5:

• If the Request is an EFT, select the bank account (Skip this step if not applicable).

 

Step 6:

You will be prompted to specify: 

• Amount Type: Is the withdrawal Full or Partial?
• Source of funds: Are the funds from the assigned Optimize Model, or All?

Step 7:

You will be asked to specify the:

• Beneficiary
• Institution type
• Institution name
• Start Date, Year Length, Program Length, Program Year
• EAP Amount, PSE Amount
• Whether you would like to use PSE to cover insufficient EAP amounts
• Check the relevant boxes if the request is an AIP or Contribution Withdrawal
• Attach the Proof of Enrollment (POE)
• Submit the request