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Education Savings

Using your RESP savings

It is very simple to write a cheque for a Registered Education Savings Plan contribution. But, accessing those funds when you need it can be very confusing. There are lots of rules to follow. Your financial advisor can help you ensure you are using the RESP in the most effective way to help your children get through school debt-free.

There are many different kinds of Registered Education Savings Plans and withdrawal rules vary. With self-directed plans set up by a financial advisor, you choose what investments in which to invest your contributions. You can access your funds in a number of ways. You can get a refund of your contributions at any time. However, if Canada Education Savings Grants from the federal government were paid based on these contributions (they pay up to $7,200 per child in grant money), and the money withdrawn isn’t used to pay for schooling costs, you may have to pay back the grants. These payments are not taxable as they were made with earnings you already paid tax on.

As long as your child is registered in a qualifying post-secondary program, you can direct the plan to pay her (or the school she is attending) an Educational Assistance Payment (EAP). These payments are made up of the government grants and the income earned by our investments. The most your child will be able to receive for the first 13 weeks of her program is $5,000. You can access more after the first three months if she remains in a qualifying program.

The EAP amount will be added to your child’s tax return as income and she will pay tax on it, but she will likely have a very low income and won’t pay much, if any income taxes.

Talk to your financial advisor about getting the most out of RESPs and how to effectively withdraw the money when your children need it.



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