How to Withdraw your Child's RESP

The time has finally arrived! Hooray!

All that time spent consistently and lovingly setting aside money for your child's education and future can finally come to fruition to be utilized for it's ultimate purpose... Post Secondary Education!!

Make sure that you give yourself plenty of time for this RESP withdrawal process since it could take several weeks. Some Post Secondary Schools, require the tuition to be paid by the beginning of August for the fall term and others don't require payment until the end of September so please look up the tuition payment deadline for your student's specific school.

Check out my updated: How do RESPs Get Paid Out blogpost first. It answers some of the more general questions about RESP withdrawal limits and options if your child doesn't attend Post Secondary Education.

Ok, step #1 is your child attending Post Secondary Education?

if No, then keep the money invested until your child does attend Post Secondary Education.

If Yes...

then proceed to step #2

which is finding the Enrollment Verification Document from their school that has:

• The name of the school

• student's name

• date of school term

• program name

• full time or part time

  Here is an example:

To find the Enrollment Verification Document, you might have to contact the school if you cannot find it on the Post Secondary School's website. Our educational institute sent us to a Mycreds website that seemed to be the place for this form to be verified. The form is usually good for 120-150 days and you may have to pay a fee for this document of approximately $10.

#3. Plan how much you want of the EAP(Education Assistance Payment) paid to the beneficiary/student. The Maximum they can receive is $8K for the first 13 weeks of full time school or $4K for part time. The student will be taxed on this money as income because it consists of the grant money and interest earned on the grant and principal contribution.

Also, plan how much of the Contribution/PSE you want paid back to you as a parents/subscriber. This amount is up to you but you want this amount paid out before your child graduates from Post Secondary School. You can use this money for yourself or give it to your student and it is not taxed because you already paid taxes on it.

#4. Fill out the Appropriate paperwork. They will ask you for the bank account information for both payments. Usually the EAP has to go to the student's bank account unless you get special permission. So if your student, doesn't have a bank account, now would be a good time to set one up.

Next you will likely have to fill out/print out and sign a document with both parents signatures.

Also, if your child is over 18 years old and you want to set up an online bank account for them with either EQ or Tangerine, those are both great options. They can still keep their student account with their regular brick and mortar bank as well. It would be beneficial to have a place with a higher interest rate and no fees.

Next we wait several weeks for the payout!

There are more restrictions with a Group RESP provider because they might have restrictions on how much money can be removed per year. For example, CST, had set amounts each year that could be removed rather than the $8K. However the nice thing about a Group RESP is that is that you can see a nice pie chart layout of each amount per year.

Now, to make things even more complicated, I have another RESP with another provider for the same child except it is in a family RESP so the totals are split between the two children. They each have their separate CESG and additional CESG and contribution amounts but the interest earned on these contributions is mixed together. As the subscriber, I decide what to do with the contributions and whether to distribute them equally or unequally amongst the children or even save it for my own retirement.

One suggestion for DIY investors is to transfer some of that money into a safer asset allocation such as a bond or GIC if you know that you will be using the money within the next couple years.

Before you start pulling out the EAP, there are some rules as stipulated on a Federal Government Bulletin. (This was not easy to find by the way.)

There are reasonable and unreasonable expenses and you can possibly be audited as a student so keep your receipts. Here is a list of the unreasonable expenses.

And then after the first 13 consecutive weeks of school, there are still EAP maximums that you can withdraw as well that changes from year to year.

So, not only keeping receipts of expenses but also keeping a spreadsheet of how much money you have withdrawn from PSE and from EAP is important especially if you have more than one provider.

Now Go and Be Intentional with your RESP withdrawal and celebrate!