RESP Withdrawal Strategy

Good Day!

With post-secondary planning on the horizon, I wanted to share a clear overview of how withdrawals from a Registered Education Savings Plan (RESP) work when your child starts school.

There are two main “buckets” of money in a RESP:

• Educational Assistance Payments (EAPs) – This is the government grant money and investment growth inside the RESP. When withdrawn, it is taxable in the student’s hands (often at a low tax rate because students typically have modest income).

  • Post‑Secondary Education (PSE) withdrawals – This is the money you originally contributed. These withdrawals are not taxed, because you paid tax on that money before contributing.

To withdraw funds for school, a few conditions must be met:

• Your child must be enrolled in a qualifying post‑secondary program (full‑time or part‑time) at an eligible college, university, trade school, or similar institution in Canada or abroad.

  • We must provide proof of enrolment to the RESP provider. Typically, this is a document from the school (on official letterhead or an official invoice) that shows the student’s name, the institution’s name, the program, their full‑time or part‑time status, and the start/end dates or term dates.

  • As the subscriber (the person who opened the plan), you need to authorize the withdrawal through the RESP provider’s form, indicating how much you want to withdraw and where the funds should be sent (to you, the student, or directly to the school, depending on the provider’s options).

There are a few important limits and planning points:

• In roughly the first 13 weeks of a full‑time qualifying program, there is a cap on how much EAP (grant and growth) can be withdrawn. After that period, the EAP limit becomes more flexible as long as your child remains enrolled in a qualifying program.

  • PSE withdrawals (your contributions) do not have the same 13‑week dollar limit when used for eligible post‑secondary education.

  • We can choose the mix of EAP and PSE with each withdrawal request. This allows us to plan tax‑efficiently—using more EAP in years when the student’s income is low, and managing contribution withdrawals so the RESP is drawn down in a sensible order.

Typical withdrawal process:

1. Your child registers for a qualifying program and we confirm it meets RESP rules.

   • We obtain acceptable proof of enrolment from the school.

   • We complete and sign the RESP withdrawal request form, specifying the amount and the source (EAP and/or PSE).

   • The provider processes the request and sends the funds as instructed.

Please let me know if you have a child starting or currently in post‑secondary, and we can schedule a brief call to review your RESP and plan your withdrawals.