The process of withdrawing funds from an RESP (Registered Education Savings Plan) is slightly more complex compared to withdrawals from non-registered accounts or TFSAs (Tax-Free Savings Accounts). To withdraw funds from an RESP, you need to:
Enter the withdrawal through your ModernAdvisor dashboard
Complete the appropriate forms and send a signed copy to us via email or online chat.
The required form for withdrawing funds depends on whether the withdrawal is for educational purposes or not, and on the financial institution or custodian holding the accounts. You also need to understand the differences between the Educational Assistance Payment (EAP) and the Post-Secondary Education Capital Withdrawal (PSE), which are explained in more detail below.
Please note: withdrawals will be processed once the custodian approves the forms and proof of enrolment (if applicable).
Educational withdrawal (EAP and PSE)
Non Education Capital Withdrawal
Proof of Enrolment
Proof of enrolment is always required for RESP withdrawals and is a document that provides the following information :
Post-secondary school name
Date when proof was issued
Semester(s) or school year
Indication that beneficiary is enrolled full- or part-time.
Acceptable examples are:
Letter from the post-secondary institution (with name and address) stating the student is enrolled in a full or part time program. The letter must be SIGNED and STAMPED by the post-secondary institution
Copy of the OFFICIAL course schedule AND valid student identification card (double sided copy).
An "Educational Assistance Payment" is any amount paid or payable under a RESP to the beneficiary to assist with the individual's education at the post-secondary school level. An EAP consists of earnings on contributions, earnings on the grant and the grant itself. These amounts do not include refunds of contributions made to the subscriber of the plan.
For the 13-week period of enrolment, a full-time student cannot receive an EAP more than $5,000 and a part-time student cannot receive an EAP more than $2,500.
Payments under the plan can be used to cover the student's living expenses, educational expenses such as tuition fees and books, and other relevant expenses.
To qualify for the EAP, the beneficiary must:
Be enrolled full-time or part-time in a qualifying post-secondary program
Beneficiary has to be recognized as a Canadian Resident.
Post-Secondary Education Capital Withdrawal (PSE)
Post-Secondary Education Capital Withdrawal is a withdrawal of contributions made by the subscriber during the time a beneficiary is eligible to receive EAP's. As the beneficiary is pursuing post-secondary education, the subscriber may withdraw his or her contributions without being required to repay any grant amounts. The subscriber must sign the request for PSE capital withdrawals.
Post-Secondary Educational Institution can be any of the following:
A university, college, or other educational institution in Canada designated by a provincial authority under the Canada Student Loans Act;
A university, college, or other educational institution in Canada designated by an appropriate authority under the Canada Student Financial Assistance Act;
A university, college, or other educational institution in Canada designated by the province of Quebec under an Act respecting financial assistance for education expenses;
An educational institution in Canada certified by the Minister of ESDC to be an educational institution providing courses (other than courses designed for university credit) that furnish a person with skills for, or improve a person's skills in, an occupation; or A university, college, or other educational institution outside Canada that provides courses at a post-secondary school level.
Non Education Capital Withdrawal
RESP withdrawals that are not being used for education will be subject to certain restrictions. You may withdraw the full value of your contributions, however any investment growth will be taxed as income, plus a 20% penalty. Any grant money in the account will be returned to the government.
you will not be taxed on the amount you contributed to the RESP, but you will have to pay taxes on the money that you earned in your plan as interest. This money is called accumulated income. It will be taxed at your regular income tax level, plus an additional 20% (or 12% if the subscriber lives in Quebec)
the money that you have put into the RESP is returned to you
the CESG can be shared with a sibling if they have CESG room available—otherwise, the CESG must be returned to the Government of Canada
the CLB can only be used by an eligible beneficiary for education, so if it is unused, it must be returned to the Government of Canada