Reader Lloyd had an RESP withdrawal question about how contribution money and non-contribution money can be distributed to different beneficiaries:
Hello Mike, I’m trying to find information about how RESP withdrawals work.
Can a family plan pay all contributions to one beneficiary and all the EAP to another beneficiary?
I’ve tried searching all over different government sites, none of which explicitly say whether this is allowed or not. Is it?
Thank you!
Good question, Lloyd. The contribution portion of an RESP account can be paid out to any beneficiary or the subscriber without any penalties or limits. To answer the first part of your question – yes, you can pay all the contributions to one beneficiary.
Related Article: 8 Things You Need To Know About Withdrawing Money From Your RESP Account
The EAP or payment of the non-contribution amount is a different matter. The non-contribution amount is made up of RESP grants plus any growth or income from the contributions. The portion of the non-contribution amount that is not RESP grant money can be shared without limit. The RESP grants can be shared, but the lifetime limit of $7,200 of grants per beneficiary must be respected.
So if you have a family account where there is $7,200 of grants or less, then all the EAP can be given to one beneficiary without any issues. If there are more than $7,200 in grants in the account, you can still pay out all the non-contribution amount to one beneficiary, but any grants in excess of $7,200 will be given back to the government.
In the latter scenario, the best strategy would be to pay out a combination of contributions and non-contributions to each beneficiary in order to avoid any loss of grants.
Related Article: Family Plan RESP Withdrawals – Don’t Overpay Grants To A Beneficiary
One reply on “RESP Question – How To Distribute Contributions And EAPs In Family RESP Account”
I went through this several years ago as I had three children. As Mike says, yes you can dole it out to one child if the other two (or whatver #) do not continue to post secondary education.
The banls or whoever will not tell you this but you want ot deplete the government contribution before you touch your contribution for the simple reason that what you put in is not taxable when you withdraw it. So if you are left with a balance after everyone has finished post secondary (not likely but possible – it happened to me) then you do not want any o fthe government contibutory monies left in there.