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Don't have an account?
Don't have an account?
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?
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 But if withdrawn for non-educational purposes, grant money will be returned to the government.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
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
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:
Tip
Rolling the growth from the RESP to your RRSP isn’t free, but it is the most tax-efficient way to remove the growth from the RESP if the beneficiary decides not to pursue post-secondary education. If you roll the growth into your RRSP you’ll receive two tax receipts, A T4 RESP receipt along with an RRSP contribution receipt. Sign-up for secure client access and we will notify you when the receipts are available.
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.
RESP Flyer – explains the benefits of opening a Franklin Templeton RESP