Q

What if my child doesn’t use her RESP?

A

You can transfer it to another child. If you've only got the one, then you can keep the RESP money, but with a penalty.

So you’ve been socking away money in an RESP for your kid’s higher education, and one day she tells you she’s got alternative plans that don’t involve university or trade school. But what happens to that RESP money?

If she has a sibling who will be going to school, the account can be easily transferred to him without penalty. If she’s an only child, or the sibling is also forgoing higher education, you can still take the money, but you’ll be assessed some pretty major fees. The government will ask that you return any of the matching Canada Education Saving Grant funds it kicked in and also pay taxes on any growth of your RESP investment — so in the end the RESP will be no better but no worse than any run of the mill brokerage investment.

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