Who Controls Withdrawals From RESP Account?

Leah asked the following RESP question:

When my daughter was 6 in 1999 she did some acting and her dad put $21,000 in an RESP with his name as subscriber and her name and her two younger brothers as beneficiaries. The fund dropped dramatically (Science and Technology) and years later she is almost 19, studying at UBC and there is only $4200 in the fund. My husband and I are now separated, he is mentally unstable, on welfare and we aren’t in contact. Can she access the funds when she turns 19 or does she need her dad to access the funds? Can she use the entire amount herself since it is such a small amount or does it need to be split with her 15 and 16 year old brothers?

Basically she is asking who has authority to withdraw money from the RESP account.  I get variations on this question quite frequently, so I thought a post might be worthwhile.

Only the RESP account subscriber can request withdrawals from the account

Basically only the subscriber or the person who set up the account can request withdrawals.  For all intents and purposes, they own the money in the RESP account.  They are under no obligation to pay out any money from the RESP account at any time.

Even if an RESP account is set up for the educational benefit of a specific person and even if that person is ready to go to school – the subscriber does not have to give them any money.  They are within their rights to collapse the account and keep any proceeds for themselves.

Make it easy for the subscriber to do an educational payment

Assuming the subscriber isn’t completely against giving money from the RESP to the student, my suggestion is to make it as easy as possible for them to do the payment.

One way to accomplish this is to find out which financial institution the RESP account is held at and then fill out the RESP withdrawal form yourself.  You will still need the signature of the subscriber, but if all he/she has to do is sign a document – that might be more doable then for them to figure out how to do the withdrawal.

As discussed in 8 things you need to know about withdrawing from an RESP, you also need proof of enrolment for the student.

Example RESP withdrawal form

Here is a link to a typical RESP withdrawal form.

To fill it out – check the first two boxes (Educational Assistance Payment and Post-Secondary Education), but leave the amounts blank, since you don’t know those figures.

In the “Total withdrawal amount”, I would enter “All – approx. $4,200”.

You will need to get the account number from your husband.

Fill in the rest of the form as best you can and then in the section where you are supposed to list the funds – either find out the fund names and put “100%” or just write “Withdraw 100% from all funds” in the first line.

One of the key steps is to instruct the institution to pay all the money to the beneficiary. Select “other (specify)” and then put the name and address of your daughter. Hopefully this will get the money sent to your daughter. If there are issues with the financial institution, it’s possible they might send the money to your husband and you will have to deal with him to get the money.

You are allowed to call the financial institution to ask questions about how to fill out the form or what their procedures are for things like who they will send the money to.  You won’t be able to ask anything specific about your husband’s account, so don’t ask.

At this point, I would say the RESP money is a bonus, so give it your best shot and see what happens.

Sharing the RESP

Leah also asks

 Can she use the entire amount herself since it is such a small amount or does it need to be split with her 15 and 16 year old brothers?

The answer is yes – she can use the entire amount herself.   I’m guessing the account is an individual RESP, but even if it’s a family plan – the answer remains yes.




14 replies on “Who Controls Withdrawals From RESP Account?”

Would the Beneficiary have RESP access if the Subscriber dies or should provisions be made for this in the Subscriber’s Will? Should an alternate Subscriber (like the other parent) be specified in a Will?

@Dax – No, the beneficiary will not “inherit” the account.

Ownership of the RESP should be specified in the will so that a new subscriber can be set up if the original one dies. This is especially important if it’s a grandparent who is the subscriber.

In the case of parents, they should really have a joint account – although that might be a problem if they are divorced.

Some financial institutions will not allow you to have a joint RESP account (RBC Direct Investing to be specific) so we had to make provisions for it to be assumed by the other spouse in the event of death. They told us if this provision was not made in our will the RESP would be collapsed and would be lumped into our estate. I disagree with being unable to have a joint RESP, it makes things far more complicated than they need to be. Also be aware that some of their employees don’t understand that you cannot designate a beneficiary to assume control of the RESP in the event of the account holders death. They keep sending me beneficiary forms which are actually used to add another child to the existing RESP. I have had to explain this to several of them already.

@Marypat – Thanks for the info. I had heard from another reader that RBC Direct does not have joint RESP accounts which I find quite incredible.

I’d say that if anyone wants a joint RESP account, they should look elsewhere.

I’ve had RESP accounts at a number of different institutions. Most of them are pretty clueless about what to do, administration issues, etc. I actually lost out on some grants I was entitled to because they didn’t know what they were supposed to do and by the time I discovered it, it was too late.

I finally opened an RESP at QTrade Investor and have been very happy with them. They know what to do, do everything right, and I’ve never had a problem with them. Plus, no fees.

Just my two cents.

the canadian national student loan branch requires a subscriber to exhaust all funds in an resp before they consider a student loan.This makes me feel that it is NOT subscribers money to do whatever or whoever with.I had 27000 dollars to help my son cover what the loan did not pay.I figured 7000 a year in each of 4 years would be a great help!! They are taking away the growth of this money over 4 years which would have been taxable to the student any way. Not impressed!!!

@GM – Thanks for the info.

@dan – I don’t understand your comment. Would it not make sense to use the RESP money before applying for loans? Isn’t that what the RESP is for?

A student loans interest does not start until 6 months after graduation.My resp money would have growth for the full 4 years whereas in depleting the plan you only get 1.5 years of growth(full payment of tuition in Jan. of second year of enrolment) This also takes in the scenario that my son will receive 100% of a loan in year 3&4 which is not very likely.Parents are required to contribute to student every year.of university if possible in their estimation of your income.In my case I will have paid 13500 in each of first 2 years and then whatever they think is fair in year 3 and4. A TFSA tailored for education of a child would function much better even without the 20% taxable grant,

@dan – I definitely don’t agree.

RESP money shouldn’t be invested in equities while the child is attending school, so growth shouldn’t be a factor.

There is no way a TFSA will outperform an RESP if the kid goes to school. The TFSA might work out better for the parent, but it will result in more student loans for the child.

It’s the “Canadian Way”.
If you work hard, spend frugally, don’t waste your money but instead save for a rainy day, forego pleasures then the government will tell you that you have too much and that you don’t qualify for grants, bursaries, loans, etc.

If you’re lazy, don’t work, waste your money on junk and pleasure, don’t apply yourself, and save nothing, then the government will throw money at you because you are one of the poor unfortunates.

“..the canadian national student loan branch requires a subscriber to exhaust all funds in an resp before they consider a student loan…”

This was not our experience when our sons applied for student loans (2009 – 2014) Most years what we did was match our withdrawals to whatever the NSLSC said the parents were expected to contribute. At some point, about half way through their education, one of our sons got a letter from NSLSC asking for a letter from the bank outlining what funds were still available in the RESP. Long story short, once the bank informed NSLSC how much funds in the RESP were available for future EAPs my son had no issue getting future student loans, and non repayable grants, while the RESP remained open.

However, we did have a bit of an issue getting the letter from the bank. Since we had always planned that we would retain the RESP contributions, to use for own retirement savings, we asked the bank to just tell NSLSC what funds would be available as EAPs. When the bank manager responded that he couldn’t do something “illegal” we withdrew the contributions. The letter the bank manager sent NSLSC outlined how much was in the account before and after we withdrew our contributions but my son had no issues with NSLSC.

We would have preferred to have left the contributions in the RESP, to earn a bit more for our son’s EAPs, but withdrawing them was preferable to misleading NSLSC about his assets. If contributors in a similar situation are concerned that RESPs might disqualify the beneficiaries from getting student loans and grants then they have the option of withdrawing the contributions before the student applies for their first student loan. (And perhaps the contributors will be able to park the funds in a RRSP or TFSA .)

Meant to type …

(And perhaps the contributors will be able to park the funds in a RRSP or TFSA or pay down their mortgage.)

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