RESP Withdrawal Rules and Strategies For 2018

The owner of RESP account needs to withdraw money from RESP account when the beneficiary starts going to school. To make a withdraw you need to show some proof that beneficiary is going to an authorized post-secondary school. You do need any specific receipts of purchases.


There are two types of RESP account, first one is contributions and another one is accumulated income. The contribution amount is the sum of the total contribution made in the account over the years. Any money rather than contribution money is called accumulated income like grants, capital gains, interest and dividends earned. The taxation on withdrawals from the contribution portion differs from withdrawing from accumulated income portion. That is the reason why the distinction is important.


  • Withdrawals from contribution income are non-taxable.
  • Educational Assistance Payments which are withdrawals of accumulated income is taxable.

With the help of personal exemption and tuition tax credits, a beneficiary can lower their tax bill. But income earned from holiday jobs can affect the Tax bill. On the other hand, there is no tax on any kind of RESP withdrawals.

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A withdrawal limitation

There is a limitation on withdrawal on the first 13 weeks, you can only withdraw $5,000. But after 13 weeks, you can withdraw as much as you can. There’s is no limit on withdrawal as long as the beneficiary is attending school.

Basic RESP withdrawal strategy

When planning to withdraw money, try to withdraw from an accumulated income. Because when beneficiary first starts the school, he/she do not have much income for the year. That is a good time to maximize your income from an accumulated portion of the account.

If the student is in the co-op program and has one school term and two work term, then it might be good to take contributions income.

What if your child doesn’t go to school?

If a student decides that schools are not for him? Then you need to end the plan and pay a tax on it. Do not worry you do not need to end the plan right away. If in future, your child wants to go to school again. You can keep your account open till 35 years.

If you want to end up the plan, then contribution income is tax-free other than that accumulated income will add up to your gross income for taxation purpose. Also, accumulated income will be charged a tax of 20 percent.


For more questions and queries, you can contact Harpinder Sidhu Insurance

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