How RESP withdrawals work when your child is ready for post-secondary school
In the first article in this series, we looked at how an RESP can help families save for education after high school. In the second, we explored how government benefit programs can help boost your education savings. In this article, we’ll look at how RESP withdrawals work and how to plan ahead when it’s time to use the funds.
After years of saving, planning, and watching your child grow, there comes a moment when the future starts to feel real. Maybe it’s an acceptance letter, a trades program start date, a college orientation package, or a conversation around the kitchen table about what comes next.
That’s when your Registered Education Savings Plan, or RESP, shifts from a savings plan to a source of support.
An RESP is designed to help pay for education after high school. Once your child enrolls in a qualifying post-secondary program, the funds can help cover eligible education costs such as tuition, books, supplies, tools, transportation, housing, and other living expenses.
Understanding how RESP withdrawals work, including how to withdraw money from an RESP, can help you feel more prepared when it’s time to use the money you’ve set aside.
Before making RESP withdrawals: confirm the program qualifies
Before requesting RESP funds, you’ll need to confirm that your child is enrolled in a qualifying post-secondary program. Eligible programs may include universities, colleges, trade schools, apprenticeship programs, colleges of general and vocational education, or CEGEPs, and other approved education programs in Canada or abroad.
Your child will typically need to provide proof of enrollment from their school. This document usually confirms details such as the student’s name, student number, institution information, program details, and whether the student is enrolled full time or part time.
Because RESP eligibility rules can change, it’s a good idea to confirm whether a specific school or program qualifies before requesting a withdrawal.
Before you request a withdrawal
- Before requesting RESP funds, it can help to gather a few details in advance:
- Proof of enrollment from the school
- Confirmation of whether the student is enrolled full time or part time
- The timing of tuition, residence, book, tool, or equipment costs
- An estimate of how much to withdraw and when
- A plan for whether the withdrawal should come from original contributions, Educational Assistance Payments, or a combination of both
Two types of RESP withdrawals
RESP withdrawals generally fall into two categories: post-secondary education contribution withdrawals and Educational Assistance Payments, often called EAPs.
Post-secondary education contribution withdrawals come from the original money contributed to the RESP by the subscriber. These contributions can usually be withdrawn tax-free because they were made with after-tax dollars.
EAPs include money from government grants and bonds, investment earnings, and eligible education incentives. EAPs are paid to the student and are reported as income by the student in the year they receive them.
Many students have limited income while attending school, so they may pay little or no tax on EAPs depending on their situation.
Are there limits on RESP withdrawals?
There are limits on Educational Assistance Payments during the early weeks of enrollment, so it’s helpful to understand the timing before making a withdrawal.
For full-time students, up to $8,000 in EAPs may generally be paid during the first 13 consecutive weeks of enrollment in a qualifying educational program.
For part-time students, up to $4,000 in EAPs may generally be paid for any 13-week period of enrollment in a specified educational program.
After the first 13 consecutive weeks for full-time studies, additional EAPs may be available if the student continues to qualify. If there is a 12-month period when the student is not enrolled in a qualifying educational program for 13 consecutive weeks, the limit may apply again.
These rules can feel detailed, but you don’t need to navigate them alone. An SCU wealth advisor can help you understand your options when it’s time to access RESP funds.
Planning the order of withdrawals
When your child starts school, it can be helpful to think about the order in which RESP funds are withdrawn.
Some families choose to use government grants, bonds, and investment earnings first, while the student is enrolled in an eligible program. This can help ensure those funds are used for their intended purpose. Original contributions may offer more flexibility because they generally belong to the subscriber and can often be withdrawn tax-free.
The best approach depends on your family’s situation, the student’s education timeline, the amount available in the RESP, and whether your child may continue in school for more than one year.
A withdrawal plan can help you make the most of the RESP and avoid leaving decisions until the last minute.
What if your child’s plans change?
One of the most reassuring things about an RESP is that it may offer options if your child’s plans change.
Maybe your child takes a gap year. Maybe they start working before deciding on school. Maybe they choose a different program than expected or decide not to attend a qualifying post-secondary program at all.
If that happens, you may still have choices, depending on your plan and eligibility requirements.
You may be able to keep the RESP open while your child decides what comes next. In some cases, you may be able to change the beneficiary, such as transferring the RESP to an eligible sibling. The original contributions made by the subscriber can generally be withdrawn.
In certain situations, investment income may be transferred to an RRSP if eligibility requirements are met and contribution room is available. However, unused government grants and bonds generally must be returned to the government if they are not used for eligible education purposes.
Because the right option depends on your specific situation, it’s wise to speak with an SCU wealth advisor before making decisions about RESP withdrawals.
Review your RESP plan before post-secondary school starts
RESP planning doesn’t end when the account is opened. As your child gets closer to post-secondary education, it’s a good idea to review the plan.
You may want to look at how the RESP is invested, how soon the money may be needed, and whether your current approach still fits your timeline and comfort level with risk. A family with a young child may have more time to consider growth-focused investments, while a family with a student starting school soon may prefer more predictable options.
Reviewing your plan ahead of time can also help you prepare for tuition deadlines, residence deposits, book costs, and other expenses that may come quickly once school begins.
A plan for their next step
Using an RESP is an exciting milestone. It means the savings you built over time are ready to support your child’s next step, whatever that step looks like.
Whether your child is heading to university or college, a skilled trade, an apprenticeship, or another qualifying program, an RESP can help make education costs more manageable.
An SCU wealth advisor can help you understand your withdrawal options, plan the timing of payments, and review what choices may be available if your child’s plans change.
To learn more, call SCU at 1.800.728.6440 or book an appointment online to speak with an SCU wealth advisor.
This article is part three of our three-part RESP series. If you haven’t already, read the first two articles to learn how RESPs work, how to start saving, and how government benefits can help grow your education savings.
Frequently asked questions about RESP withdrawals
What proof of enrollment do I need?
Your RESP provider will typically ask for proof of enrollment that confirms the student, school, program, and whether the student is studying full time or part time.
Can RESP money be used for rent or living expenses?
RESP funds can help support education-related costs such as tuition, books, supplies, tools, transportation, housing, and other living expenses. Keep in mind that there are restrictions in the first 13 weeks of the start of your program. Your RESP provider may ask for documentation to support the withdrawal request.
What happens to unused RESP money?
Unused RESP money may have several possible outcomes depending on the plan, beneficiary, and government rules. Contributions may be returned to the subscriber, investment income may have transfer options if requirements are met, and unused government benefits generally must be returned to the government if they are not used for eligible education purposes.
