When does an RESP have to wrap up?

All good things must come to an end, and RESPs are no different. An RESP must be closed by the 36th year after it’s opened. At that point, any government grant money that’s not used for education goes back to the government. Contributions remaining in the plan are treated as unclaimed property and any leftover income earned will be paid to a designated educational institution.

Before the plan expires, a subscriber can simply have the contributions returned tax-free and withdraw the earning as an “Accumulated Income Payment”, but that can mean hefty taxes on the income earned. To avoid paying taxes on all that growth, it’s wise to transfer the remaining earnings into an RRSP or into an RDSP (Registered Disability Savings Plan), if you’re eligible, and if you have contribution room. Tax-sheltered growth for the win!