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What happens when my child is ready to use their RESP?

by Maxine
Posted August 1 2010 12:43am
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RESPs can be accessed as soon as your child enrolls in a qualified full-time post-secondary education program. These include apprenticeships and programs offered by a trade school, CEGEP, college or University. These usually include a course of study that lasts at least three consecutive weeks, with at least ten hours of instruction or work each week. If the program is at an educational institute outside of Canada it must last at least 13 weeks.

If your child does not choose to continue education after high school you have several options, depending on your RESP plan. You should speak to your plan holder about specifics. You always have the option of waiting to see if your child changes his or her mind and decides to go to school. RESP accounts can remain open for up to 36 years. You can also transfer the money to one of your other child’s RESP accounts, 

With many plans you can choose to transfer the money into a Registered Retirement Savings Plan (RRSP) or withdraw your contribution. When you withdraw the money you will have to pay the taxes on the money that you earned in your plan as interest. It will be taxed at your regular income level, plus an additional 20 per cent. All government contributions are returned, unless you transfer the money to a sibling’s account. The Canada Learning Bond cannot be transferred to another child and must be returned to the Government of Canada. Any additional money that you contributed to the RESP and the interest it earned goes back to you. Be sure to talk to your RESP provider for specific details.

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