We have an interesting RESP question asked by Bea – who shall henceforth be referred to as “Grandma B”. 🙂
Here is her comment:
Who supervises how the resp is spent–can a child remove all the funds and not use them for education–I am a grandmother of a family who have resp grants from me–I hold the papers in my name and know the father would love to grasp the funds on the 18th birthday–what is the protection–is there proof needed by the government that it was used for education? If the 2nd child turns 18 and the first one did not go on to school are they transferable? Appreciate your comments. Bea
Wow, I sense that RESPs are not a calm dinner table topic in that family!
Ok, let’s go through the questions:
Can a child (or beneficiary) remove funds from an RESP account?
No, they can’t. The person who opens the RESP account (also known as the subscriber) is the only person who can authorize any payments from the account.
Can the child’s father remove money from the RESP account?
No, same reason as above.
What proof is needed that money from an RESP is used for education?
When you do a proper educational assistance payment (EAP) then you have to show proof of enrolment to the financial institution when you request a payment. Contact the financial institution for the exact documentation they require. You don’t have to provide receipts or prove that the money was spent on anything “educational”.
Can I transfer RESP money to a sibling?
Yes, you can. If the older child does not use all their RESP amounts, then you can transfer to a sibling. Keep in mind that the lifetime grant limit of $7,200 will still apply. If you try to transfer grants which give one beneficiary more than $7,200 in grants, then the grants will be returned to the government.
You don’t need a family plan account to do the transfer. This can be done between two individual accounts as well.
I hope this answers your questions, Grandma B!
Want to learn more about RESPs? Buy The Book:
The RESP Book: The Simple Guide to Registered Education Savings Plans
Everything you need to know about RESPs.