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How do you collect RESP withdrawals?
Money is withdrawn from an RESP through an Education Assistance Payment (EAP).
An EAP is composed of the CESG plus the income generated by the total amount of
RESP and CESG contributions. EAP’s can be used to cover education costs that
include tuition, books, supplies, computers, travel, room and board.
What happens if the beneficiary doesn't use the money for post-secondary education?
You have options:
- Change the beneficiary to another qualified beneficiary
- Roll the principal into your RRSP or your spouse's RRSP if there is room up to a maximum of $50,000
- Take out the principal with no tax consequences. Accumulation is subject to income tax and an additional 20% surtax
- The Canada Education Savings Grant is returned to the federal government
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