You can also use an RESP for a range of different apprenticeships. This includes full and part-time studies, as well as other programs offered by government-designated institutions. In these cases, you can make tax-free transfers from one RESP to another. To transfer RESP funds, there must be a common beneficiary between the originating and receiving plan.
Or the beneficiary must be under 21 and a brother or sister of the original beneficiary. Additional conditions may apply, so it is always wise to speak to your financial provider before making any moves. Your financial advisor can help to make sure you have RRSP contribution room.
To do this the RESP must have been in effect for at least 10 years and all beneficiaries must be at least 21, and not seeking higher education. Your financial institution will return grants and their earnings to the Government of Canada. But, you will have to pay taxes on the money that you earned in the plan as interest. I understand I can unsubscribe at any time and acknowledge that this email address belongs to me.
Learn more about privacy and how we collect data to provide you with more relevant content. Budget calculator. Financial check-up. Your first option is to keep the money in the RESP account. They may change their mind about further education in the future and can still use those funds.
RESPs can also be used for apprenticeship and part-time job training programs. If you have another child with an RESP, you may also be able to transfer funds to them without penalty, depending on your specific plan. Talk with a financial professional to find out more about this option. If you choose to transfer funds, make sure you have room in your RRSP contribution limit for that year. An RESP has a maximum life of 35 years. After this, the plan must be closed. EAP stands for educational assistance payment.
They are accumulated earnings and grants paid from an RESP to an eligible beneficiary for post-secondary education expenses. AIPs do not include:. As soon as a beneficiary enrolls in a qualifying educational program, they can start receiving money from the RESP in the form of educational assistance payments EAP. Programs may include apprenticeships and programs offered by a trade school, college or university.
They may also be offered by other institutions certified by the Minister of Employment and Social Development Canada. Once this period is over, the beneficiary can get any amount of EAPs.
EAPs only include income and grant money. If a child named in an RESP decides not to continue education after high school, you may choose to:. In some circumstances, you may be able to name another beneficiary in an individual plan. It may be counterintuitive to leave this money in the RESP to continue to grow depending on your circumstances.
This reinforces the importance of planning ahead with your RESP. RESP withdrawals are subject to certain limits depending on the plan and the program your child is enrolled in, so check with your RESP provider. But since you mentioned that neither you nor your spouse have RRSP room, Kevin, this may not be an option.
If either of you is still working, you might consider stopping RRSP contributions to allow your contribution room to grow to take advantage of the AIP transfer. Another option with a family RESP like the one you have is to add another child to the plan who is related to you by blood or adoption. The financial institution where your RESP is held will be responsible for determining what portion relates to capital, grants and income, Kevin.
So start by figuring out what portion can come out tax-free, what amount will be repaid to the government and what AIP money is either taxable to you, available to a related child or able to be transferred to an RRSP.
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