{"id":10259,"date":"2025-09-03T20:46:58","date_gmt":"2025-09-03T20:46:58","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/?p=10259"},"modified":"2025-09-05T20:49:13","modified_gmt":"2025-09-05T20:49:13","slug":"maximizing-your-resp-withdraw-wisely","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/maximizing-your-resp-withdraw-wisely\/","title":{"rendered":"Maximizing Your RESP: Withdraw Wisely"},"content":{"rendered":"<section class=\"elementor-section elementor-top-section elementor-element elementor-element-45d6f3e elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"45d6f3e\" data-element_type=\"section\">\n<div class=\"elementor-container elementor-column-gap-default\">\n<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-b62a84e\" data-id=\"b62a84e\" data-element_type=\"column\">\n<div class=\"elementor-widget-wrap elementor-element-populated\">\n<div class=\"elementor-element elementor-element-9dd3593 elementor-widget elementor-widget-text-editor\" data-id=\"9dd3593\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n<div class=\"elementor-widget-container\">\n<p><a href=\"https:\/\/wellington-altus.ca\/wp-content\/uploads\/2025\/09\/AWPG_Maximizing_Your_RESP_08_2025_Final_EN.pdf\" target=\"_blank\" rel=\"noopener\">Download this article as a PDF<\/a>.<\/p>\n<p>A Registered Education Savings Plan (RESP) is a Canadian registered investment account that promotes saving to support a beneficiary\u2019s post-secondary education. Anyone \u2014 parents, family and friends \u2014 can open a RESP as a \u201csubscriber\u201d for the benefit of a child. Invested contributions grow tax-free until withdrawal.<\/p>\n<p>When the time comes to withdraw funds for post-secondary education purposes, many subscribers wonder: is there a best approach to maximize the RESP\u2019s value and minimize taxes?<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<section class=\"elementor-section elementor-top-section elementor-element elementor-element-b08deb8 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"b08deb8\" data-element_type=\"section\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n<div class=\"elementor-container elementor-column-gap-default\">\n<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-97d1d15\" data-id=\"97d1d15\" data-element_type=\"column\">\n<div class=\"elementor-widget-wrap elementor-element-populated\">\n<div class=\"elementor-element elementor-element-6081708 elementor-widget elementor-widget-text-editor\" data-id=\"6081708\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n<div class=\"elementor-widget-container\">\n<p><strong>An example:<\/strong>\u00a0When Riley was born, his parents followed their wealth advisor\u2019s advice and opened a RESP family plan for Riley, and other future children, to save for their post-secondary education. Their regular contributions, along with eligible government grants, were invested wisely and have grown steadily over the years.<\/p>\n<p>Now \u2014 in what seems like the blink of an eye \u2014 Riley will be off to his first year of university, and his parents want to withdraw from the RESP to support him during his first year. The RESP account administrator has asked for instructions on how to withdraw from the RESP: should<br \/>\nit be taxable receipt, a non-taxable receipt<br \/>\nor a combination?<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<section class=\"elementor-section elementor-top-section elementor-element elementor-element-4f1e3e5 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"4f1e3e5\" data-element_type=\"section\">\n<div class=\"elementor-container elementor-column-gap-default\">\n<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-2190aad\" data-id=\"2190aad\" data-element_type=\"column\">\n<div class=\"elementor-widget-wrap elementor-element-populated\">\n<div class=\"elementor-element elementor-element-2d3978b elementor-widget elementor-widget-text-editor\" data-id=\"2d3978b\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n<div class=\"elementor-widget-container\">\n<p><strong>The following withdrawal is a taxable income receipt:<\/strong><\/p>\n<ul>\n<li><strong>Educational Assistance Payments (EAPs),<\/strong>\u00a0consist of the Canada Education Savings Grant (CESG), the Canada Learning Bond (CLB), provincial education savings grants (if applicable) and any earnings generated on the contributed funds within the RESP. The money can be used to pay for any \u201creasonable\u201d expenses while the beneficiary is enrolled in a qualifying post-secondary program, including tuition, books, rent and food.<\/li>\n<\/ul>\n<p><strong>The following withdrawal is a non-taxable capital receipt:<\/strong><\/p>\n<ul>\n<li>A tax-free return of contributions from the plan. There are two terms used to describe these capital withdrawals, depending on the beneficiary\u2019s eligibility to receive EAPs:\n<ul>\n<li><strong>Post-Secondary Education Payment (PSE).<\/strong><br \/>\nA PSE is a tax-free withdrawal of contributions made during the time a beneficiary is eligible to receive EAPs. It may be paid to the subscriber or beneficiary. No repayment of grants is required.<\/li>\n<li><span class=\"s2\"><b>Withdrawal of Contributions.<\/b>This term varies across institutions, but it is effectively a tax-free withdrawal of contributions made at a time when the beneficiary is not eligible to receive EAPs.<br \/>\nThe subscriber may withdraw their contributions, but may be required to repay some or all grant amounts in the RESP.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<section class=\"elementor-section elementor-top-section elementor-element elementor-element-df3be5c elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"df3be5c\" data-element_type=\"section\">\n<div class=\"elementor-container elementor-column-gap-default\">\n<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-a9b5f48\" data-id=\"a9b5f48\" data-element_type=\"column\">\n<div class=\"elementor-widget-wrap elementor-element-populated\">\n<div class=\"elementor-element elementor-element-4001e66 elementor-widget elementor-widget-text-editor\" data-id=\"4001e66\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n<div class=\"elementor-widget-container\">\n<p><strong>Here are a few key considerations for Riley\u2019s parents to help make the most of the RESP:<\/strong><\/p>\n<p><strong>1. Withdraw Educational Assistance Payments (EAPs) first<\/strong><\/p>\n<ul>\n<li>\n<ul>\n<li>EAPs are considered taxable income to the beneficiary for the year in which they are withdrawn. For this reason, it\u2019s usually better to access EAP payments early in the student\u2019s post-secondary career, when they are likely to have lower income and access to basic personal amount and tuition and education credits which may result in little to no tax payable on such withdrawals.<\/li>\n<li>Riley is eligible for EAP withdrawals while he is enrolled full-time or part-time in a qualifying post-secondary educational program and would remain eligible within a six-month period after leaving school (among other conditions). Note: Withdrawals are limited to $8,000 for full-time students (or $4,000 for part-time students) during the first 13 weeks of post-secondary education. Once the 13 weeks have passed, any available amount of EAP can be withdrawn.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>2. Plan to withdraw contributions as Post-Secondary Education Payments (PSEs)<\/strong><\/p>\n<ul>\n<li>\n<ul>\n<li>The contributions Riley\u2019s parents made to the RESP can continue to grow tax-deferred within the account but can be withdrawn from the plan at any time. For example, Riley may need additional funds beyond his EAP payments as he progresses through his program, so his parents should consider making a tax-free PSE withdrawal while he is enrolled and eligible.<\/li>\n<li>If Riley needs access to funds when he is not eligible for EAP payments \u2013 say he decides to take a year off school to work or travel \u2013 contributions can still be withdrawn tax-free, but the government grants associated with those contributions may need to be repaid.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>3. Transfer unused funds to another beneficiary or RRSP<\/strong><\/p>\n<ul>\n<li>\n<ul>\n<li>RESPs can remain open and continue to grow tax-free for 35 years, but occasionally a beneficiary will decide against or be unable to pursue post-secondary education. In this case with Riley, as he has a younger sister Kim, the contributions and accumulated growth in the RESP could easily transfer to his sister Kim. However, Riley\u2019s CESG, CLB and provincial grants may only transfer in certain circumstances.<\/li>\n<li>It may also be possible to name another beneficiary to an individual or family RESP subject to certain rules and fees.<\/li>\n<li>If a transfer is not possible, it may be necessary to close the RESP. Original contributions are returned to the subscriber tax-free, and the CESG, CLB and provincial grants are returned to the government. Riley\u2019s parents should know that any remaining income earned within the plan that cannot go to another beneficiary would be paid out to them as an\u00a0<strong>Accumulated Income Payment (AIP)<\/strong>\u00a0and taxed at their marginal tax rates in the year they receive it\u00a0<strong>plus an additional 20% tax<\/strong>. For this reason, it\u2019s a good idea for them to plan withdrawals carefully while Riley is still in school. They may be able to avoid the penalty and defer the taxes on the AIP by transferring the AIP to an RRSP account if they have the contribution room<sup>1<\/sup>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<section class=\"elementor-section elementor-top-section elementor-element elementor-element-babc473 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"babc473\" data-element_type=\"section\">\n<div class=\"elementor-container elementor-column-gap-default\">\n<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-0e56042\" data-id=\"0e56042\" data-element_type=\"column\">\n<div class=\"elementor-widget-wrap elementor-element-populated\">\n<div class=\"elementor-element elementor-element-5284e62 elementor-widget elementor-widget-text-editor\" data-id=\"5284e62\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n<div class=\"elementor-widget-container\">\n<p>When withdrawing from an RESP, there are a variety of considerations to keep in mind, such as is this the first time the beneficiary is attending post-secondary education, are they attending full or part-time, and what makes the most sense \u2013 withdrawing EAP and\/or PSE.\u00a0<strong><a href=\"https:\/\/wellington-altus.ca\/wp-content\/uploads\/2025\/09\/AWPG_RESP_Education_Planning_Chart_08_2025_Final_EN.pdf\">This RESP decision tree<\/a>\u00a0<\/strong>outlines the different withdrawal options available depending upon the student\u2019s circumstances.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<section class=\"elementor-section elementor-top-section elementor-element elementor-element-2e286dd elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"2e286dd\" data-element_type=\"section\" data-settings=\"{&quot;background_background&quot;:&quot;classic&quot;}\">\n<div class=\"elementor-container elementor-column-gap-default\">\n<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-fcfa281\" data-id=\"fcfa281\" data-element_type=\"column\">\n<div class=\"elementor-widget-wrap elementor-element-populated\">\n<div class=\"elementor-element elementor-element-de07b61 elementor-widget elementor-widget-text-editor\" data-id=\"de07b61\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n<div class=\"elementor-widget-container\">\n<p class=\"p2\"><strong>Important to Know<\/strong><\/p>\n<p class=\"p2\">RESP withdrawals often take longer to process than regular account withdrawals due in part to the information required to be sent to Service Canada to update their records. Please allow a minimum of 10 days to process a RESP withdrawal to ensure expectations are met. To start planning RESP withdrawals or for help budgeting for a child or family member\u2019s post-secondary education, reach out to your Wellington-Altus advisor.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<section class=\"elementor-section elementor-top-section elementor-element elementor-element-6451399 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"6451399\" data-element_type=\"section\">\n<div class=\"elementor-container elementor-column-gap-default\">\n<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-59e2517\" data-id=\"59e2517\" data-element_type=\"column\">\n<div class=\"elementor-widget-wrap elementor-element-populated\">\n<div class=\"elementor-element elementor-element-0f31498 elementor-widget elementor-widget-text-editor\" data-id=\"0f31498\" data-element_type=\"widget\" data-widget_type=\"text-editor.default\">\n<div class=\"elementor-widget-container\">\n<p><sup>1<\/sup>\u00a0To qualify for a transfer to RRSP, the RESP must be at least 10 years old, with all beneficiaries over the age of 21 and ineligible for EAPs. Up to $50,000 can be transferred. If RRSP contribution room is limited, one potential strategy could be to reduce RRSP contributions in the years prior to the expected AIP to preserve contribution room.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>A Registered Education Savings Plan (RESP) is a Canadian registered investment account that promotes saving to support a beneficiary\u2019s post-secondary education. Anyone \u2014 parents, family &#8230;<\/p>\n","protected":false},"author":128,"featured_media":9792,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_oasis_is_in_workflow":0,"_oasis_original":0,"_oasis_task_priority":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[18],"tags":[16],"class_list":["post-10259","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth-planning","tag-english"],"_links":{"self":[{"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/posts\/10259","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/users\/128"}],"replies":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/comments?post=10259"}],"version-history":[{"count":1,"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/posts\/10259\/revisions"}],"predecessor-version":[{"id":10260,"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/posts\/10259\/revisions\/10260"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/media\/9792"}],"wp:attachment":[{"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/media?parent=10259"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/categories?post=10259"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advisor.wellington-altus.ca\/fleischhacker\/wp-json\/wp\/v2\/tags?post=10259"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}