You can withdraw the original contributions without paying tax on them, but you would need to pay back the corresponding CESG back to the government. Other types of withdrawals would be taxable and may incur a 20% penalty. I don't have any more details on that. As I mentioned, this is from what I've read and looked into for future RESP purposes.
What do I need to know about withdrawing from an RESP? Ideally, you’ll want to take an Education Assistance Payment (EAP) in a way where your beneficiary won’t have to pay tax on it. Once your beneficiary is enrolled in a post-secondary program—say, a carpentry apprenticeship or an engineering degree—the EAP money becomes available.
In order to withdraw money from their RESP, the subscriber needs the beneficiary (student) to provide proof of enrollment confirming the beneficiary is enrolled as a full-time or part-time student in a post-secondary program or institution. In most cases this means providing one or more documents demonstrating key elements (student name, program name etc.) for enrollment in the current year.
The government looks at the total amount in the RESP and considers it being in three buckets: the money the subscribers contributed, the grant money from the government, and the income earned over the years. The withdrawal of the original contributions is called “Post-Secondary Education Payments” (PSE). This money was contributed from after-tax income, so it is withdrawn tax-free. You do.
Withdraw from Your RESP. How to Access Your RESP Savings. You planned; you saved; you did it -- congratulations! Your decision to invest in an RESP is about to pay off in a world of possibilities for your student. The time has come to reap the rewards of your commitment by turning your RESP into funding for post-secondary education. We are here to help you understand what’s best for your.
Familiarize yourself with your financial institution’s RESP withdrawal form and seek advice well before you need to withdraw money. Like Cindy’s family, you’ll have to make plans for accessing the RESP funds you’ve invested since converting investments to cash can take time and planning (see below). Remember, for the purpose of withdrawals, the money in your RESP account is a.
When it comes to taking money out of an RESP, it gets a little more complicated. Withdrawals are divided into two categories: Post-Secondary Education (PSE) payments and Education Assistance Payments (EAP). PSE payments are not taxable because it’s the money you invested in the RESP in the first place, which was not tax-exempt. EAP funds are comprised of grants, bonds, or accumulated income.
Since many students have little or no other income, they can usually withdraw the money tax-free. The money that you have put in the RESP is returned to you, tax-free. For more information, please call the Canada Revenue Agency at 1-800-959-8281 or visit the Educational Assistance Payments section of the Canada Revenue Agency's website. Child who decides not to continue education after high.