How to withdraw funds from your child’s RESP

How to withdraw funds from your child's RESP

RESP is a powerful Investment Tool for parents While some parents know how to invest in an RESP, they aren’t aware of how to withdraw funds to make the most of the benefits offered by this plan.

Here is how you can make the most of withdrawals from your child’s RESP.

Taking money out of an RESP

The first step is to contact your RESP provider and provide proof of enrollment to withdraw Educational Assistance Payments (EAPs). These are payments that include your investment earnings and government grants.

You may also be provided with a list of allowable expenses that the money can be used for. You may be asked to provide receipts for school purchases to prove the money is being spent on allowable educational expenses.

The amount that can be withdrawn

According to the rules, you can take out $5,000 of EAPs during the first 13 weeks of your child’s full-time post-secondary program. After that, EAPs can be personalized and students can withdraw EAPs as they need for their education-related expenses, until it’s all used up.

If your child is enrolled in part-time studies, then their Educational Assistance Payments will be limited to $2,500 for every 13-week period of enrollment.

Canada Education Savings Grant lifetime limit

EAPs consist of your savings as well as the Canada Education Savings Grants, provincial grants and Canada Learning Bonds received. Your child cannot receive more than $7,200 in Canada Education Savings Grants in their lifetime.

When your child receives an EAP, a notice detailing the amount of Canada Education Savings Grants in the payment received will also be provided. It is up to your child to keep track of the amount of Canada Education Savings Grant money they have received. Any amount beyond this limit must be repaid.

Withdrawing beyond the limit

In case of extenuating circumstances when you need to withdraw money beyond the limit, your RESP provider can submit a request to the Minister of Employment and Social Development for approval. Once the request is approved, your RESP provider will then complete a request form on your behalf and submit it to the Canada Education Savings Program for the excess.

If a child does not continue education after high school

There are five choices a parent can make in this case:

  1. You can leave the money in the RESP that can be left open up to 35 years in case your child decides to continue education later in life.
  2. You can replace the beneficiary for the RESP.
  3. You can transfer the money to your RRSP.
  4. You can close the RESP.

In all these cases, it is advisable that you speak to your RESP provider to find out about any other terms and conditions. Withdrawing funds from your child’s RESP requires careful planning and consideration. Contact Harpreet Puri for expert advice to help you make the best decisions for your child’s education.