RESP Withdrawal Rules and Strategies For 2015

by Mike Holman

When the RESP beneficiary (student) is ready to go to school, the subscriber (owner of RESP account) needs to start withdrawing money from the RESP account. To withdraw money you have to provide some proof to your resp provider that the resp beneficiary (child) is going to an approved post-secondary school. You don’t have to show receipts for specific purchases.

Two types of money in the RESP account

In your RESP account, there are two different types of money: contributions and accumulated income.

  • The contribution amount is the sum of all the contributions that you made to the account over the years.
  • The accumulated income is made up of grants, capital gains, interest, dividends earned in the account.Any money that is not a contribution is considered to be accumulated income.

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This distinction is important because the taxation of withdrawals from the contribution portion of the account is different than withdrawals from the accumulated income portion.

  • Contribution withdrawals are not taxed.
  • EAP (educational assistance payments) which are withdrawals of accumulated income, are taxed as income at the hands of the student.

The good news is that students have the personal exemption, as well as tuition tax credits which helps lower their tax bill. Obviously income earned during summer jobs or on co-op work terms will affect their taxes as well.Another bit of good news is that you can tell your financial institution if you are with drawing contributions or EAP (or both) so you can manage the taxes to some degree.

Please note there is no withholding tax on any kinds of RESP withdrawals, so if the student ends up in a taxable situation, they will have to pay the taxes at tax filing time.

A withdrawal limitation

First – one withdrawal rule to get out of the way – you are only allowed to withdraw $5,000 of accumulated income in the first 13 weeks. After 13 weeks, you can withdraw as much accumulated income (via EAP) as you wish.  There are no limits to withdrawals from the contribution portion as long as the child is attending school.

Basic RESP withdrawal strategy

When planning the withdrawals, try to withdraw as much accumulated income money as you can tax free.For example when the student first starts school, they will have just completed a short summer (two months) so they probably won’t have much income for the year. That might be a good time to maximize payments from the accumulated income portion of the account (EAP).

On the other hand, if the student is in a co-op program and has two work terms in one year and only one school term, that might be a good year to take out contributions rather than accumulated income.

You don’t want to end up with accumulated income in the RESP account if the child is no longer going to school.

What if your child doesn’t go to school?

What happens if Junior decides that school is not for him?  You have to collapse the plan and pay a pile of tax on it.

First of all you have lots of time to collapse the plan so don’t do it right away. It’s always possible that your child will give up on their pro hockey or musician career and will need the money for schooling later on.  You can keep the account open for 35 years after the year in which the account was opened.
If you do collapse the plan, the contributions are tax free, anything else (accumulated income) is added to the subscriber’s gross income for taxation purposes.And on top of that, the accumulated income is charged a tax of 20%.
If you are retired or have any way to reduce your income in the year you collapse a resp plan, do it to save taxes.

What if the child does more than one session at school (ie multiple degrees)?

You are allowed to use the RESP for one degree and then keep some money in the account for future education.  The only limit is the 35 year limit previously mentioned.  Be warned that it’s not a bad idea to take out all the RESP money during the first degree so that there are minimal taxes and no penalties.  If you save money in the RESP account for future degrees and the child doesn’t end up using the money, there will be increased taxes and penalties.

More RESP information

8 Things you need to know about withdrawing money from your RESP account.  Lays out the details of how to actually withdraw the money.

How to withdraw excess money from your RESP account.  Some strategies for withdrawing extra RESP money without penalty.  This applies if the student started school and quit early or ended up with extra money.

How to avoid RESP withdrawal penalties if the child doesn’t go to school.  If you child ends up not using the RESP at all – here are some ideas to avoid penalties and taxes.

More RESP information – Comprehensive list of RESP articles on this site.

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{ 223 comments… read them below or add one }

201 Di_Jor_2014

Can funds be used for post-graduate studies in the US? My son is planning on getting his 4 yr psych degree in Canada (in his 2nd year) – then he is hoping to go to a university in California to obtain his PhD (the university is on the approved school list) – so I was just wondering about holding on to some of the funds for the expensive post-grad studies. Is this a smart / allowable thing to do?

202 Oliver

We have a family RESP plan for our 3 children. Our son is now at University and we have started to withdraw EAPs to cover his expenses.

The plan was originally an individual one which was converted to a family plan when the other two kids arrived. The RESP plan conversion was messed up but we only found that out many years later. During the conversion process we lost all the CESG that had accumulated in the individual plan and could not get it back when we discovered the error.

My question is – In making EAP withdrawals for our son what is our CESG withdrawal limit? Is it the $5800 listed on the account records or can we take it to the $7200 individual limit even though this amount was never granted? Thank you.


Once our monthly payments have been made and my child is only going to go to school in the following year does my principal still collect interest that my child will use for his schooling.

204 Donna

I was married…opened a joint resp. My ex-husband was called the primary caregiver, as I was on maternity leave. Opened it at a bank in BC. I now live in Ontario. Kids live with me. My exhusband took money out of the resp without my signature. Now my child needs more money from the resp and I am not allowed to withdraw without his signature. He is not willing to sign. How did he get the money out the first time without my signature?

205 Glenn Sawula

RE:post 157. I could not find your reply to the question of whether a
RESP could be transferred to a RDSP if a child is diagnosed with a
disability after an RESP has been opened and contributed to.

Thanks for your reply.


206 terry

what happens if you need to remove money for an emergency and the child is still in public school. ie;the money will not be used for school

207 Kwong

Can I withdrawn part of the RESP to put into my RRSP while my son is still in school without negative tax implications. I have already taken out the contribution portion and there is still more than enough.

208 Tarah

I am so frustrated by the disbursement rules around my RESP. 8-10 years ago I took a two-day course and received funds from my RESP, which my grand parents set up for me. Now I want to take a one-week course that has 35 hours of coursework and they say I’m not eligible – that the program has to be three consecutive weeks of 10 hours of coursework per week. The program I want to take has more course hours and is through an approved university. Is there a way around this ridiculousness??

209 ana

I have a question about EAP withdrawal. Let’s say I have the max grant on my resp $7200 and made 12000$ interest on my resp all together. I can withdraw $5000 max for my child for the first 13 weeks, how can I withdraw the interest of 12000$ if max withdraw to the government grant is 7200$. I believe they call it AIP the accumulated income. What will be the best way to do withdrawals in this case.

210 Anca Pirvu

Hi Mike.
Nice blog with lots of useful information. Question for you. We have the RESP money invested in 3 different mutual funds. Two of them performed well but the third one – Target 2015 we had to sell it at a loss. Can this loss be declared on the tax return form?

211 Sheila M. H.

Hi Mike, I don’t know if you answered this question yet as there are a lot of answers to read through. My daughter has received EAP income from the family RESP for the past 3 tax years including 2014 and received a T4A receipt for doing her taxes for 2012 and 2013. She did not received a T4A for 2014, but in 2014 her brother also started receiving EAP income and he did get a T4A, but only for a portion of what was withdrawn and given to him. My financial institution said that they must have already received the taxable portion from grant and growth.
So on the taxes, do they still have to submit the full amount they received as income, when they did not get a T4A for the full income portion? Then with my daughters taxes, she will not have to claim any EAP income this tax year?

212 Marc P

Has there been changes to RESP taxation? My daughter must pay $400 tax on her RESP grant money as the tax is applied as a special tax once all Federal taxces were calculated and credits deucted. Taxes were applied at 20% on the RESP grant at the very end of the T! General. Am I missing something?.

213 TammyLee

My daughter is completing her second degree. We still have about $9000 in RESP $’s. Her final tuition is only about $7500. She also has scholarship money comping in. Her education income will definitely exceed her expenses. Can she contribute extra RESP $ withdrawn to an RRSP in the same year?

214 robin

we are ready to withdraw funds for college for my daughter but RESP company needs proof of enrollment which apparently can’t be obtained until the beginning of august after she has paid the first semester tuition of $3700. she has a letter of acceptance plus a receipt for her $500 deposit in June, shouldn’t this be enough for “proof of enrollment”? The whole point of RESP is to pay for tuitiion etc so why do we have to pay it up front?? bloody annoying!

215 Tony M

Hi Mike,

I have a family RESP. I contribute equal amounts for my two kids. My older child will (hopefully) attend a post-secondary school before the other. Will she have access to the entire amount of funds within the plan, or only what has been contributed and accumulated in her name?



216 jenny tang

Hi, my daughter went to university for two years and left 2014/02. She did not withdrew any RESP can she still do it now? Or she can withdraw only when she is back to school again?

217 jenny tang

Hi, my child went to university for two years and left 2014/02. She did not withdrew any RESP can she still do it now? Or she can withdraw only when she is back to school again?

218 Luke Snell

Hi Mike. On the EAP guidelines it says that you can use the money for Tuition, Books/Supplies and Transportation. What are the specifics? Like if maybe I needed to buy a computer, would I be able to pay for it throught the EAP as a school supply?

219 Diane Southcott

When you say the RESP can be held and withdrawn for subsequent degrees does this include doctorates?

220 Jian Song

Hi, Mike,
Does the 13-week rule ($5000 withdrawal) apply to the first year only or every year?

Many thanks.

221 Mike Holman

@Jian – The 13 week rule only happens once.

222 Mike Holman

@Dianne – Yes. But don’t ‘save’ the RESP account for subsequent degrees unless you are 100% sure they are going to happen. It’s better to take the money out when you can as a student (ie undergrad), save the surplus and then use that fund to pay for further education.

223 Mike Holman

@Luke – Read the first article linked “8 things you need”…

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