Investing for Post-Secondary Education

Non-Educational Withdrawals

There are several ways to withdraw from an RESP for non-educational purposes. Here’s a look at each type of withdrawal, including the conditions and consequences.

What if a beneficiary doesn’t attend school?

WITHDRAW THE CONTRIBUTIONS

You can withdraw contributions at any time. But if withdrawn for non-educational purposes, grant money will be returned to the government.

How to withdraw: Mail or fax us a completed RESP Withdrawal Form

WITHDRAW THE GROWTH

A non-educational withdrawal of growth is called an Accumulated Income Payment (AIP). This can only be done under the following conditions:

  • the plan has been registered for 10 years

    and

  • all beneficiaries in the plan are at least 21 years old

If the above conditions are met, you can withdraw the growth in cash (minus withholding taxes and penalties*).

*The government applies the following withholding tax rate to AIP cash withdrawals:

Withdrawal Amount% of Federal Tax Withheld
From $0 to $5,000 30% (41% in Québec)
From $5,001 to $15,000 40% (50% in Québec)
Greater than $15,000 50% (55% in Québec)

How to withdraw: Mail or fax us a completed RESP Withdrawal Form

TRANSFER TO AN RRSP

If you have RRSP contribution room—and if the RESP meets the AIP requirements, above – you can transfer the remainder of the RESP to a retirement savings plan without withholding taxes or penalties.

How to transfer to an RRSP: Mail or fax us the following:

  • A completed T1171 Waiver
  • A copy of your most recent Notice of Assessment

ADD OR REPLACE A BENEFICIARY

In an individual plan, there is an opportunity to replace the beneficiary. In a family plan, there may be an opportunity to add a beneficiary. However, both of these options could result in an over-contribution and loss of incentives. If you are considering doing this, please review with your advisor or call us to discuss the implications prior to submitting a request.

Flyer

RESP Flyer – explains the benefits of opening a Franklin Templeton RESP

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