If you withdraw money from an RESP before your beneficiary has enrolled in a post-secondary program, there are penalties. Here are some key things you will have to remember if you decide to withdraw:

  • Government grants proportionate to the amount withdrawn will have to be returned
  • The lifetime contribution limit into the RESP will be reduced by the amount withdrawn
  • You will also give up the amount of grant repaid
  • If you are eligible to withdraw the earnings, you’ll also have to pay taxes plus a penalty of 20% unless they are transferred to an RRSP OR RDSP, if there is room for contributions there

If all this penalty talk is scaring you there is a silver lining for you. As long as you don’t close the plan, the income you earn on your contributions will remain within the plan.

Invest in your future engineer

Raising your little superstar can be chaotic so we made saving for their future education simple.