Withdrawing funds from an RESP is quick and straightforward. The key is to understand the two types of withdrawals: your contributions and the Educational Assistance Payments (EAPs) paid to your beneficiary. It is important to plan these withdrawals carefully.
When your child heads off to post-secondary education, all you have to do is log in to your Client Space to reap the rewards of your efforts. Follow these steps:
1. Submit a withdrawal request
Select the amount you wish to withdraw from your RESP, based on your child’s current needs and the duration of their studies.
2. Provide proof of enrolment
You must submit an official document confirming your child’s enrolment—not their acceptance—in an eligible educational program.
3. Receive the funds
Get the requested amounts within a few days, deposited directly into your bank account or your beneficiary’s bank account, to cover their educational expenses.
At the time of withdrawal, your contributions are treated differently for tax purposes than the grants and income that you have accumulated tax-free since opening your account.
Educational Assistance Payments, which include grants and income, are taxable in the hands of your beneficiary. They must report them for the tax year in which the amounts were paid.
Since a student’s annual income is generally low, the EAPs are subject to little or no tax. It all depends on their other sources of income.
Your contributions belong to you and are tax-free when withdrawn, since they were already taxed at the source. You can give them to your child, reinvest them, or use them for your own projects: it’s up to you!
Since every situation is unique, feel free to work with your Kaleido scholarship representative to develop a withdrawal plan. Alternatively, you can use certain strategies to optimize your RESP withdrawal and reduce its tax impact:
Withdraw the EAPs first so that your contributions can continue to generate income while your beneficiary is in school.
Spread out the withdrawals based on your beneficiary’s current needs and their planned education path.
Take your beneficiary’s annual income into account when calculating their EAPs, in order to minimize the tax liability.
Transfer your contributions to another child’s RESP, then apply for new grants.
Reinvest your contributions in your RRSP for retirement and enjoy a very attractive tax refund.
Not at all! At Kaleido, you can submit your request online through your Client Space. You will simply need to provide proof that your beneficiary is enrolled in an eligible post-secondary program.
The RESP subscriber is the only person who can request a withdrawal.
However, the money can be deposited into their bank account or into their beneficiary’s account.
You can withdraw as soon as your beneficiary’s enrolment in an eligible post-secondary program (full-time or part-time) is confirmed. Official proof of enrolment is required to withdraw funds from an RESP.
Withdrawals of your contributions are tax-free, while withdrawals of grants and accrued interest (Educational Assistance Payments) are taxable to the beneficiary. The tax impact is often minimal given the beneficiary’s income.
Yes. It is possible—and even strongly recommended—to make withdrawals from an RESP gradually, depending on the student’s needs. You can adjust the frequency and amounts of Educational Assistance Payments (EAPs) throughout your child’s educational journey, based on their expenses and your withdrawal strategy.
An RESP can remain open for 35 years. This gives your child time to change their career plans if they do not wish to continue their studies right away.