Withdrawing from an RESP

Registered Education Savings Plans (RESPs) are set up to help pay for a child’s post secondary education. When the time comes, it is important to know how to make a withdrawal to help pay for your child’s expenses.

Although the RESP looks like a lump sum of money, it is actually divided into the following categories:

• Contributions

  - The funds that the subscriber used to fund the account

• Government grants

  - The funds that the government provides as an incentive for investing in a child’s future post-secondary education. Questrade RESPs can hold Canadian Education Savings Grant (CESG), Canadian Learning Bond (CLB), and Quebec Education Savings Incentive (QESI) for residents of Quebec

• Investment growth

  - The funds that are attributed to the increase in value from investing contributions and government grants

Each type of withdrawal from an RESP will have some combination of the above three categories of funds.These accounts have 4 types of withdrawals available:

• Education assistance payment (EAP)

• Post-secondary education payment (PSE)

• Capital withdrawal

• Accumulated income payment (AIP)

Terms to be familiar with: Beneficiary - A child who will be using the funds in the RESP to pay for their post-secondary education Subscriber - The account holder of the RESP, usually a parent or grandparent of the beneficiary

Education assistance payment (EAP)

Source of funds

Government grants (CESG, CLB, QESI) and investment growth

Beneficiary’s enrollment status

Enrolled in a post secondary program at a qualifying institution (opens in a new tab)

Key details

When making this type of withdrawal, the combination of growth and grants is run through a formula to determine how much of each is withdrawn. It is not possible to request only the growth, or only the grant amount.EAPs can be withdrawn by either the beneficiary (the child), or the subscriber (the account holder and contributor). The amount withdrawn is considered “income” for the recipient, and will be taxed as such.EAPs are limited to $8,000 for the first 13 weeks of studies (usually the first semester) for full-time students, with no restrictions on withdrawals after this time period. For part-time students, EAPs are limited to $4,000 each consecutive 13 week period.For more information on this limit, please refer to the government of Canada’s guidelines (opens in a new tab).

Withdrawal process

To request an EAP withdrawal, follow these steps:

1. Complete the RESP Withdrawal Request form (opens in a new tab) and upload it to your account. Under the Document Type section, select “EAP Form (RESP Withdrawal Request Form)”

   • This form needs to be hand-signed. You can upload a clear photo or scanned image

2. Upload a “Proof of enrollment” document. A proof of enrollment document must:

   • Be obtained from the post-secondary institution Be within 6 months old Include the student’s full name Include the program’s name, start date, end date, total duration, and current year of study Indicate whether the program is full- or part-time

3. If there isn’t one already on file, upload the void cheque or direct deposit form for the beneficiary’s bank account

Note: if choosing to have the funds withdrawn to the subscriber’s bank account, a Letter of Direction (LOD) must be uploaded to the subscriber’s Questrade account. The LOD must include:

• The date

• Full names of the subscriber(s) and beneficiary

• A message stating that the beneficiary gives their consent for this withdrawal

• Signatures of the subscriber(s) and beneficiary

Post-secondary education payment (PSE)

Source of funds

Contributions only

Beneficiary’s enrollment status

Enrolled in a post secondary program at a qualifying institution (opens in a new tab).

Key details

PSE withdrawals can be made to either the beneficiary or subscriber, with no limitations of how much to withdraw. Because this type of withdrawal is removing the initial contributions, it is not taxed to either the beneficiary or the subscriber at the time of withdrawal.

Withdrawal process

To request a PSE withdrawal, follow these steps:

1. Complete the RESP Withdrawal Request form (opens in a new tab) and upload it to your account. Under the Document Type section, select “EAP Form (RESP Withdrawal Request Form)”

   • In the “Notes” section of the form, indicate that this is a PSE withdrawal

   • This form needs to be hand-signed. You can upload a clear photo or scanned image

2. Upload a “Proof of enrollment” document. A proof of enrollment document must:

   • Be obtained from the post-secondary institution

   • Be within 6 months old

   • Include the student’s full name

   • Include the program’s name, start date, end date, total duration, and current year of study

   • Indicate whether the program is full- or part-time

3. If there isn’t one already on file, upload the void cheque or direct deposit form for the beneficiary’s bank account

Capital withdrawal

Source of funds

Contributions only

Beneficiary’s enrollment status

Not enrolled in a post-secondary program (or has previously received an EAP, see note below)

Key details

Capital withdrawals are the repayment of all or part of the original contribution made.This type of withdrawal can only be made to the subscriber’s bank account. Use this withdrawal only if you do not intend to use these funds for post-secondary education of the beneficiary/ies.Grants received on these contributions will be returned to Employment and Social Development Canada (ESDC), and other provincial grant providers if applicable.The investment growth may remain in the account unless you are choosing to close the RESP. If the RESP is closed, the investment growth must be donated to the post-secondary institution of your choice.An alternative to the donation is to leave the RESP account open for at least 10 years, at which point the investment growth can be withdrawn or transferred to the Registered Retirement Savings Plan (RRSP) of the account holder/subscriber.Note: If your beneficiary has previously received an EAP withdrawal (see above), you may withdraw your initial contribution corresponding to the grants and growth of that EAP withdrawal, and no other funds need to be returned.

Withdrawal process

To request a capital withdrawal, follow these steps:

1. Complete the RESP Capital Withdrawal form (opens in a new tab) and upload it to your account. Under the Document Type section, select “RESP Capital withdrawal form”.

   • This form needs to be hand-signed. You can upload a clear photo or scanned image

2. If there isn’t one already on file, upload the void cheque or direct deposit form for the subscriber’s (account holder’s) bank account.

Accumulated income payment (AIP)

Source of funds

Investment growth only

Beneficiary’s enrollment status

Special circumstances, see below

Key details

An AIP can be made to the subscriber(s) of the RESP if any one of the following conditions are met:

• The payment is made after the year that includes the 9th anniversary of the RESP and each individual (other than a deceased individual) who is or was a beneficiary has reached 21 years of age and is not currently eligible to receive an EAP

• The payment is made in the year that includes the 35th anniversary of the RESP, unless the RESP is a specified plan in which case the payment is made after the year that includes the 40th anniversary of the RESP

• All the beneficiaries under the RESP are deceased when the payment is made

A 20% withholding tax is applied to AIP withdrawals, unless the funds are transferred to the subscriber’s RRSP account (there must be available RRSP contribution room available for this transfer)For more information about this type of withdrawal, view the government of Canada’s guidelines for AIPs (opens in a new tab).

Withdrawal process

To request an AIP withdrawal, follow these steps:

1. Download and complete the Questrade Letter of Direction for AIP Rollover/Withdrawal (opens in a new tab)

2. Upload your completed Letter of Direction form by logging in to your Questrade account and going to Management > Account management > Upload documents. Please select “Letter of direction”

   under Document type when uploading this document.

3. Download and complete the T1172 (opens in a new tab) form

4. Mail in the original copy containing an original signature

5. If there isn’t one already on file, upload the void cheque or direct deposit form for the subscriber’s (account holder’s) bank account

To request to have the proceeds from an AIP transferred to the account holder’s RRSP, follow these steps:

1. Download and complete the Questrade Letter of Direction for AIP Rollover/Withdrawal (opens in a new tab)

2. Upload your completed Letter of Direction form by logging in to your Questrade account and going to

   Management > Account management > Upload documents. Please select “Letter of direction” under Document type when uploading this document.

3. Download and complete the T1171 (opens in a new tab) form

4. Mail in the original copy containing an original signature

Questrade’s mailing address

Questrade Inc. 5700 Yonge Street, Suite 1900 North York, ON M2M 4K2If mailing by courier, please include a note to have the delivery person speak to the concierge for access to the 19th floor.