A Registered Education Savings Plan (RESP) is a tax-advantaged account designed to help save for a child's post-secondary education in Canada. When it's time to use those funds, specific withdrawal rules determine how much you can take out, who receives the money, and how withdrawals are taxed.
This guide covers the types of RESP withdrawals, withdrawal limits, tax treatment, what happens if the beneficiary doesn't pursue post-secondary education, and strategies to make the most of your plan.
Types of RESP withdrawals
RESP withdrawal rules govern how funds leave the plan. There are two main types of withdrawals — Post-Secondary Education (PSE) payments and Educational Assistance Payments (EAP) — and each has different rules for who can receive the money and how it's taxed.
PSE payments
PSE payments are the return of the subscriber's original contributions — the money the person who opened and contributed to the RESP put in. Because these contributions were made with after-tax dollars, PSE payments are not taxable when withdrawn. They can be sent to either the subscriber or the beneficiary (the student named in the plan).
EAP
EAP includes the government grants — such as the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) — along with any provincial incentives and investment earnings accumulated inside the plan. EAP can only be sent to the beneficiary. These payments are considered taxable income in the student's hands.
Eligibility requirements
To receive either type of withdrawal, the beneficiary must be enrolled as a full-time or part-time student in a qualifying post-secondary institution. The subscriber must provide proof of enrolment, such as:
An offer letter or letter of acceptance
Course confirmation showing the student's name, student number, programme, and term dates
How to withdraw from an RESP
To withdraw funds from an RESP, the subscriber — the person who opened and contributed to the account — must contact the financial institution that holds the plan (known as the promoter).
Here's what you'll typically need to provide:
Proof of enrolment — a letter of acceptance, course confirmation, or other documentation showing the student's name, student number, programme, and term dates
A withdrawal request form — the financial institution will have a specific form to complete
Banking information — to receive funds via direct deposit
Once the documentation is submitted, the promoter will process the withdrawal. PSE payments can be sent to the subscriber or the beneficiary, while EAP can only be sent to the beneficiary.
RESP withdrawal limits
There is an $8,000 withdrawal limit on EAP during the first 13 weeks of full-time enrolment. For part-time students, the limit is $4,000. There is no limit on PSE contributions that can be withdrawn at any time.
After 13 weeks, any amount of EAP can be withdrawn without restriction for full time students. Part time students are still affected by the cap.
Withdrawal type | First 13 weeks (full-time) | First 13 weeks (part-time) | After 13 weeks |
|---|---|---|---|
| PSE (contributions) | No limit | No limit | No limit |
| EAP (grants + earnings) | $8,000 | $4,000 | Full-time: No limit; Part-time: $4,000 |
Each beneficiary can receive a lifetime maximum of $7,200 in CESG. Anything in excess of that must be returned to the government.
If the costs of the programme exceed the limit, the financial institution holding the RESP can apply to the Minister of Employment and Social Development for approval to withdraw more.
How RESP withdrawals are taxed
The tax treatment of RESP withdrawals depends on which type of payment is being withdrawn.
PSE payments — these are the subscriber's original contributions returned tax-free, since they were made with after-tax dollars
EAP — these include government grants (CESG, CLB), provincial incentives, and investment earnings, and are taxable income for the beneficiary, reported on a T4A tax slip
Since most full-time students have little or no other income, the tax owed on EAP withdrawals is often minimal or zero. To reduce the tax burden, consider spreading EAP withdrawals across multiple tax years rather than withdrawing everything at once.
RESP withdrawal rules for family plans
There are two types of RESP — single beneficiary and family plan. If you have a family plan, each beneficiary must be:
Connected by blood or adoption to each subscriber
Under 21 years of age at the time the plan was opened, if the RESP was started after 1998
If the RESP is being transferred from one family member to another, the new beneficiary can be 21 or older, as long as they are connected by blood or adoption to the subscriber
PSE payments have no withdrawal limit. The EAP limits are the same as described above — $8,000 in the first 13 weeks for full-time students (then no limit), and $4,000 for each 13-week period for part-time students.
There is a maximum of $7,200 in CESG per beneficiary. If you have a family plan with more than one beneficiary, track the amounts carefully to make sure no single beneficiary exceeds their limit. Any CESG payments exceeding $7,200 must be returned to the government.
What happens if the beneficiary doesn't go to school
If the beneficiary doesn't pursue post-secondary education or leaves school early, the RESP may need to be collapsed. When that happens:
Government grants (CESG, CLB) are returned to the government
The subscriber can withdraw their own contributions (PSE) without penalty
Investment earnings remaining in the plan become an Accumulated Income Payment (AIP)
AIP must be included as income and will be taxed at the subscriber's marginal tax rate, plus an additional 20% penalty (12% for residents of Quebec).
Transferring an AIP to an RRSP
If the subscriber or their spouse has Registered Retirement Savings Plan (RRSP) contribution room, they can transfer the AIP — up to a maximum of $50,000 — to their RRSP on a tax-deferred basis. The transfer is available if:
The subscriber is a resident of Canada
Only one subscriber claims the payment
The RESP was open for at least 10 years and each beneficiary is over 21 and not eligible for EAP, or all beneficiaries have passed away, or the payment occurs in the 35th year following the year the RESP was opened
Tips to maximize RESP withdrawals
With some planning, you can make the most of the funds in your RESP and reduce the tax impact on withdrawals.
Withdraw PSE contributions first — since PSE payments are tax-free, consider withdrawing these first to cover immediate costs
Spread EAP withdrawals over multiple years — by withdrawing EAP amounts across several calendar years, the beneficiary can take advantage of lower annual income and basic personal tax credits
Use the full $8,000 EAP limit early — in the first 13 weeks, you can withdraw up to $8,000 in EAP for full-time students, and after that there are no limits (for full-time studies; part-time students stay capped at $4,000 per 13-week period).
Track CESG amounts carefully — each beneficiary has a $7,200 lifetime CESG limit, so in a family plan with multiple beneficiaries, monitor individual amounts to avoid exceeding the cap
Consider the beneficiary's income — if the student has a part-time job or other income, factor that in when deciding how much EAP to withdraw in a given year.
