> HOW CAN I GET THE MONEY?
Withdrawals from an RESP are called Education Assistance Payments (EAPs). You can only withdraw up to $5,000 of accumulated income in the first 13 weeks your child is enrolled full-time in a postsecondary institution. After 13 weeks, your child can dip into his or her RESP savings, but those withdrawn funds are taxable at his or her current net income. As a full-time student, that isn’t likely to result in much of a tax bill, if at all. If your child doesn’t attend postsecondary school, you have two choices for how to exit the RESP: you can close it altogether, or you can roll the balance into a registered retirement savings plan (RRSP), if you have the contribution room. But be aware that the RESP will consist of two parts: contributions are the money you deposited into the plan. Accumulated income is the portion of money you didn’t contribute. This includes CESG, dividends, capital gains and interest payments. “(Anyone) who opens an RESP may withdraw their contributions for non-educational purposes at any time,” says David Birkbeck, senior director, registered plans, RBC. “What you need to be aware of is that, if you do choose this option, you’ll have to return any government grant and bond money received for your child.” Once you’ve paid back the grants, you will be taxed on any investment gains at your current income level. If you roll that money into your RRSP, the investment gains can also be transferred tax free. Certain stipulations for rolling an RESP into an RRSP must be met, adds Birkbeck. “Your RESP must have been in effect for at least 10 years.”