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Save for a child’s university or college costs through RESPs. (Photos.com)
Save for a child’s university or college costs through RESPs. (Photos.com)

Taking money out of an RESP

Education assistance payments (EAPs) Add to ...

​When the beneficiary finishes high school and enrols in post-secondary education, they can start taking payments from their RESP. These payments, known as educational assistance payments (EAPs), are made up of the investment earnings and government grant money in the RESP.

How EAPs work

To qualify, you must show proof that your child is enrolled in a qualifying educational program. Qualifying programs include apprenticeships, and full-time and part-time programs offered by colleges, universities, trade schools and CGEPs. Learn more about which programs qualify.

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EAPs are taxable in the hands of your child. Most students will likely pay little or no tax because they have little or no additional income, and can take advantage of tax credits for students.

In most cases, you choose the amount and timing of the payments. But your child can't get more than $5,000 in payments until they complete 13 weeks of their program in a row.

You or your child won't pay tax when contributions are withdrawn. Your child will pay tax on EAPs, which are made up of investment earnings and government grants.

EAPs from group plans

Group plans have their own payment rules. Your child’s EAPs are made up of your government grants, the earnings on the grants and a share of the group plan’s combined earnings.

Group plans often have additional rules about how much and how often your child can take EAPs, and which education programs are eligible. Know the rules before you open a group plan.

How much your child is eligible to take out in EAPs depends on:

  • how much you received in grants and how much they’ve earned in the plan,

  • what the plan has made by pooling and investing your savings with money from other plan members,

  • how many plan members have dropped out and forfeited their earnings to the plan,

  • how many plan units you own, and

  • the number of children who are sharing in the same pool.

Group plans often have additional rules about how much and how often your child can take EAPs, and which education programs are eligible. Know the rules before you open a group plan.

Withdrawing contributions: You can usually withdraw your contributions from an RESP at any time, but it depends on the terms of your plan. You or your child won't pay tax on any contributions that are withdrawn. But if you withdraw contributions early, you'll have to return any matching government grants for these contributions.

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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