RESP Withdrawals in Canada: EAPs, Contributions and Unused Savings

When post-secondary education begins, a Registered Education Savings Plan (RESP) can contain several kinds of money: personal contributions, government education savings benefits, and investment growth. The rules differ by source. Understanding those differences can help families ask the RESP promoter for the right payment and keep the student’s tax records organized.

This guide explains the main RESP withdrawal types and questions to ask before requesting money. It is general information, not tax or investment advice. Confirm your plan contract, current government rules and personal tax situation with the RESP promoter and a qualified tax professional where needed.

Three sources of money, different withdrawal rules

An RESP balance may include:

• Subscriber contributions: money paid into the plan by the subscriber or others.
• Education savings benefits: such as the Canada Education Savings Grant (CESG), Canada Learning Bond (CLB), or eligible provincial incentives.
• Investment earnings: interest, dividends or other growth accumulated in the plan.

The RESP promoter administers the plan and determines the documentation and process under the contract. Ask for a breakdown of the account before deciding which payment to request.

Educational Assistance Payments (EAPs)

An Educational Assistance Payment is paid to or for an eligible student to help with post-secondary education costs. An EAP generally contains government benefits and investment earnings, rather than the subscriber’s original contributions. Eligible expenses may include tuition, books, tools, transportation and reasonable living costs, subject to the program and plan rules.

The student generally includes an EAP as income in the year it is received. The promoter reports the payment on a T4A slip. A student’s other income and tax situation affect the final tax result, so avoid assuming every withdrawal will be tax-free.

To request an EAP, the student must be enrolled in a qualifying program at an eligible educational institution. The promoter will ask for official proof of enrolment and may request other information about the expense. Some federal limits apply when a student first qualifies or studies part-time. The promoter can explain the current limit and whether an exception process applies to a larger request.

Returning contributions

Subject to the contract, an RESP promoter can generally return subscriber contributions tax-free to the subscriber. Those contributions were made with after-tax money and are not usually reported as income when returned. A subscriber may choose to give some or all of the returned amount to the beneficiary, but that is a separate personal decision.

Contribution withdrawals can affect government benefits. For example, grants or other incentives may need to be repaid in some situations, especially if the student does not pursue eligible education. Before requesting a contribution refund, ask the promoter to explain how the withdrawal affects each benefit in the plan.

What if the beneficiary delays or does not attend school?

A student may change plans, take time off or choose a different path after high school. In many cases, the RESP can remain open for later eligible studies. Other possibilities may include changing the beneficiary, transferring plan property to another RESP, returning contributions, or eventually closing the account. The available options depend on the plan type, beneficiary relationships, timing and government rules.

Do not close an RESP before checking what happens to grants, bonds, provincial benefits and accumulated earnings. Unused incentives may have to be repaid to the government. A transfer may have contribution-history or beneficiary conditions, so ask the promoter to confirm the consequences before moving money.

Accumulated Income Payments (AIPs)

If investment earnings are not used for education, they may sometimes be paid to the subscriber as an Accumulated Income Payment. AIPs are available only when statutory conditions are met. They are generally included in the recipient’s taxable income and may also face an additional tax. Special tax-deferred transfers to an RRSP or certain other registered plans may be possible for eligible subscribers who meet the rules, but conditions and limits apply.

An AIP is not the same as a tax-free return of contributions or a student’s EAP. Ask the promoter to identify the proposed payment type and provide an estimate of the tax reporting before authorizing it. A tax professional can assess whether a transfer option is available for your circumstances.

Questions to ask the RESP promoter

• How much of the account is contributions, grants or bonds, and investment earnings?
• Is the student and program eligible for an EAP, and what proof of enrolment is required?
• What EAP amount can be paid now, and do first-period or part-time limits apply?
• How will an EAP be reported to the student for tax purposes?
• Would returning contributions require any grant or incentive repayment?
• If education plans change, can the RESP stay open, change beneficiary or transfer?
• What fees, timelines or plan restrictions apply to each option?

Keep records for the student and subscriber

Retain the promoter’s statements, withdrawal confirmations, proof of enrolment and T4A slips. Track the CESG and other government-benefit amounts paid to the beneficiary. If more than one RESP exists for a student, coordinate requests and contribution history with the promoters to avoid surprises.

For current details, review the Government of Canada’s guidance on paying for education with an RESP, the CRA’s RESP payments and transfers, and the guidance on managing an RESP, taxes and transfers. Government requirements and plan terms can change.

Plan RESP withdrawals around the student’s needs

Smile Insurance offers RESP planning conversations for families in British Columbia, Alberta and Ontario. Explore the RESP planning overview or compare how an RESP and TFSA may serve different savings goals. Contact Smile Insurance about RESP planning. Before sharing private financial or personal information through a general form, ask which secure channel to use.