Other Withdrawal Types for your RESP
It’s important to know that an RESP can remain open for 35 years. That’s good news if your student has decided to postpone or prolong their post-secondary education and they are in an individual plan. But if your student is not going to pursue post-secondary studies in an eligible program or recognized institution, you have other options. You can transfer the plan to another student within the allowable timeframe or you can consider one of the other ways to withdraw funds from your plan. We are here to help you understand the different options.
Accumulated Income Payments (AIP)
An Accumulated Income Payment provides an option to withdraw funds from your RESP if your student is not attending post-secondary studies or if there is remaining income in your plan after Education Assistance Payments have been received. As a Canadian resident, you can receive an AIP once you have held your RESP for at least 10 years and your student is 21 years of age. An AIP must be issued before the termination date of your plan which is indicated on your annual statement of account. Government grants will be sent back to the government when you request an AIP.
You have two options when you request an AIP. The option you choose is entirely up to you:
- Withdraw the AIP as Income - You can choose to withdraw the income remaining in your plan as an AIP. It’s important to know that AIPs are taxable and must be included on your income tax return in the year the funds are received. AIPs are also subject to an additional withholding tax. Simply complete the Request for Accumulated Income Payment form.
- Transfer the AIP directly to your RRSP - To reduce the amount of tax payable, you can also choose to transfer the AIP directly to your RRSP (or a spousal RRSP), provided you have the contribution room. To request a transfer to your RRSP, there are two forms to complete – Request for Accumulated Income Payment Form and the T1171 Form (Tax Withholding Waiver on Accumulated Income Payments from RESP)
Everything you need to know about Accumulated Income Payments
For more information about requesting an AIP, download our AIP Instruction Sheet.
If you need to withdraw contributions from your RESP prior to when you are eligible to receive an AIP, it is considered a ‘non-PSE withdrawal’. Partial withdrawals will allow you to retain your RESP, whereas your plan will get cancelled if you withdraw all your contributions. The education grants must be returned to the government proportionately to the contributions you have withdrawn. The Canada Learning Bond (CLB) and BCTESG are an exception, as contributions are not required to receive the grants. Please refer to the prospectus for more details on this type of withdrawal or contact us for more information.