RESP: Frequently Asked Questions

RESP: FAQs

1. Our child was born recently and we have not received a social insurance number (SIN). Can we still open an RESP account?
   No. The SIN is a required piece of information of the beneficiary that is needed to open the account. Please contact Service Ontario for more information on your child’s SIN.
   
2. What is the 16/17 Rule?
   The Canada Education Savings Grant Program has been designed to encourage long term savings for post-secondary education. Known as the “16/17 Year Rule”, it specifies that beneficiaries that are 16 and 17 years old will be eligible to receive CESG only if one of the following two conditions is met:
   • A minimum of $100 in annual RESP contributions must have been made in any four years (and not withdrawn) before the end of the calendar year the beneficiary turned 15. OR
   • A minimum of $2,000 in RESP contributions must have been made (and not withdrawn) before the end of the calendar year the beneficiary turned 15.
3. Are there limits on the amount of money that can be put into an RESP?
   Yes, there is a lifetime limit of $50,000 for each beneficiary for all RESPs. Although there are no annual limits for contributions on RESPs, the Canada Education Savings Grant will only be paid on the first $2,500 of contributions (plus up to another $2,500 if the beneficiary has CESG room carry forward from previous years). The total amount of contributions that are eligible for Government Grants is $36,000 per beneficiary.
   
4. How long does it take to receive CESG?
   The banking institution files contributions with HRSDC on a monthly basis. The HRSDC validation process may take up to 6 weeks; however, any applicable CESG is typically paid into the RESP within 4 weeks of filing the request.
   
5. Can one child be the beneficiary of more than one RESP?
   Yes, there is a lifetime limit of $50,000 for each beneficiary for all RESPs. Although there are no annual limits for contributions on RESPs, the Canada Education Savings Grant will only be paid on the first $2,500 of contributions per year, up to $7,200 for the lifetime of the plan (plus up to another $2,500 if the beneficiary has CESG room carry forward from previous years).
   
6. What documents are required to add a new beneficiary to an existing Family RESP?
   A Form/Application or a letter of direction signed by the account subscriber(s) requesting the addition of the new beneficiary. The following details of the new beneficiary need to be given on the request:
   • Name
   • Date of Birth
   • Social Insurance Number
   • Gender
   • Relationship to Subscriber
   Please note the beneficiary must be under 21 years of age. 2. The HRSDC grant application form for the new beneficiary.
7. What does blood relationship mean?
   A blood relationship is that of a parent and child (or other descendants, such as a grandchild or a great grandchild) or that of a brother  and sister. Blood relationship excludes that of uncle, aunt, niece, nephew, and cousin for CESG purposes.
   
8. Can an adoptive parent be a subscriber on an RESP account?
   Yes, including legal adoption or adoption by fact (a child who is wholly dependent on, and in the custody and control of the “adopting” parent).
   
9. How are contributions allocated between the beneficiaries on a Family RESP account?
   By default, all contributions into a Family RESP account are divided evenly between all beneficiaries under 31 years of age. A request can typically be made to change the allocations of contributions.
   
10. Can an RESP account with the grandparents as subscribers be transferred to an RESP account with the parents as the subscribers for the same beneficiaries?
    Yes. Appropriate forms/letters/application must be completed.
    
11. Are there any age restrictions to redeem money from an RESP?
    No.
    
12. Are RESP contributions tax deductible?
    No. RESP contributions, or any interest owed on money borrowed to contribute, are not tax deductible. However, any investment income earned within the RESP will grow free of tax until a beneficiary withdraws the funds to pay for their post-secondary education (an educational assistance payment “EAP”). When an EAP is received, it is taxed at the beneficiary’s marginal tax rate.
    
13. What happens when you over-contribute into an RESP?
    Over-contributions (exceeding maximum $50,000 lifetime contribution limit) to an RESP are subject to 1 per cent per month tax on the excess amount until it is withdrawn. The excess amount still counts against the lifetime limit even if it has been withdrawn.