Is it possible to transfer an RESP to an RRSP?

A Registered Education Savings Plan (RESP) is a strategic method to secure funds for your children’s post-secondary education expenses. Yet, what some may overlook is the option to transfer funds from an RESP to a Registered Retirement Savings Plan (RRSP). Here, we will delve into the specifics of whether such a transfer is possible and the crucial regulations and factors to consider. However, before delving into that, let’s grasp the essence of RESP and its significance. 

Let’s explore the Registered Education Savings Plan (RESP).



Start Early

To optimize investment growth, open an RESP for your child as soon as they are born.

Take Advantage of Grants

To receive the full Canada Education Savings Grant (CESG), aim to contribute at least $2,500 annually, and also look into other potential grants and bonds.

Explore Additional Financial Assistance

To maximize investment growth, open an RESP for your child as soon as they are born.

Automatic Contributions

Establish automatic contributions for consistent savings, eliminating the necessity for manual transfers.

Diversify Investments

Seek advice from a financial advisor to diversify your RESP portfolio according to your risk tolerance and investment timeframe.

An RESP is a government-sanctioned savings plan tailored to assist families in saving for their children’s post-secondary education. Once established, parents, grandparents, or other family members can contribute funds to an account earmarked for covering expenses such as tuition, books, and other educational necessities at a college, university, or trade school.

RESP Guidelines

RESP Guidelines Key Points
Tax-Deferred Growth Contributions grow tax-deferred until withdrawal.
Non-Deductible Contributions Contributions aren’t tax-deductible but income grows tax-free.
Canada Education Savings Grant (CESG) Government matches 20% on the first $2,500 yearly, up to $7,200.
Smart Education Funding Understand basics for effective and well-funded education.

If you’re embarking on contributing to your child’s Registered Education Savings Plan (RESP), here are the key points to keep in mind:

  • Contributions grow tax-deferred until withdrawal.
  • While RESP contributions aren’t tax-deductible, any investment income within the plan grows tax-free until it’s utilized for educational purposes.
  • The Canadian government provides additional support through the Canada Education Savings Grant (CESG), matching 20% of the first $2,500 of yearly contributions, up to a lifetime maximum of $7,200 per child.

Understanding these fundamentals will help you optimize your RESP and ensure sufficient funding for your child’s education in the future.

Understanding The Why

Reasons to Transfer 


Minimize Tax Burden Defer taxes on RESP withdrawals through RRSP transfer.
Unused RESP Funds Avoid tax implications if a child doesn’t pursue education.
Maximize RRSP Space  Optimize overall tax strategy by maximizing RRSP contribution room.
CESG Growth in RRSP CESG funds grow tax-free within RRSP, enhancing long-term savings.
Flexible Investments Diversify investments within RRSP to align with financial goals.

Now that we have a grasp of RESPs, let’s delve into transferring funds from an RESP to a Registered Retirement Savings Plan (RRSP). Why would someone redirect money intended for their child’s education to their own retirement fund? The reality is, not all children opt for higher education. Sometimes, funds remain in their Registered Education Savings Plans even after their studies are complete. Transferring these surplus funds to your RRSP can prove advantageous, allowing you to defer taxes on the withdrawn amount. It becomes one of the most advantageous RESP withdrawals for non-educational purposes.

Guidelines for Transferring Funds from RESP to RRSP

Before transferring funds from your Registered Education Savings Plan (RESP) to your Registered Retirement Savings Plan (RRSP), it’s crucial to familiarize yourself with the specific rules and conditions governing this financial transaction. To simplify matters, consider the following key points:

Age and Education Status:

– Each child beneficiary must be at least 21 years old.

– They should not currently be enrolled in post-secondary education.

Parents’ Tip: Plan ahead and consider your child’s future education needs when contemplating the RESP to RRSP transfer. Ensure they meet the specified age requirements and are not actively pursuing higher education.

RESP Duration:

– The RESP account must have been open for a minimum of 10 years.

Parents’ Tip: Begin your child’s RESP early to fulfill the 10-year criterion. The longer the account remains open, the more flexibility you have in managing the funds.

RRSP Contribution Space:

– Sufficient RRSP contribution space must be available.

Parents’ Tip: Monitor your RRSP contribution room to ensure it accommodates the intended transfer from the RESP. Seek advice from financial experts if necessary to optimize your contribution space.

Timing and Exceptions:

– The transfer is permissible in the 35th year after enrolling in the RESP plan.

– Alternatively, it’s allowed if all beneficiaries under the plan have passed away.

Parents’ Tip: Familiarize yourself with these time-sensitive conditions. Diligent maintenance of the RESP can transform it into a valuable financial asset well into the future.

Extended RESP Lifespan:

– An RESP can remain open for up to 35 years, offering flexibility even if your child is not actively pursuing education.

Parents’ Tip: Recognize the extended lifespan of the RESP. This flexibility allows you to adapt to changing circumstances and make informed decisions about utilizing the funds.

Understanding these rules and tips regarding Registered Education Savings Plans for parents and students is crucial before initiating an RESP to RRSP transfer. With comprehensive knowledge and strategic planning, you can confidently navigate this financial process, ensuring maximum benefits for both you and your child’s future.

Guidelines for RESP Withdrawals

Understanding the withdrawal regulations for your Registered Education Savings Plan (RESP) is crucial. These guidelines serve as a compass for navigating the financial terrain, whether you’re contemplating withdrawing funds for non-educational purposes or transferring them from an RESP to an RRSP. Here are some key points to clarify matters for parents and students:

1. Tax-Free Withdrawals on Contributions:

Withdrawals from your RESP contributions are a breeze and, even better, tax-free. This means you can take out the money you’ve contributed without facing any tax implications. This provides reassurance to parents seeking access to their invested funds.

2. Returning CESG or CLB Funds:

It’s essential to handle grants like the Canada Education Savings Grant (CESG) or Canada Learning Bond (CLB) with care. If these funds aren’t withdrawn as Education Assistance Payments (EAPs), they must be returned to the government. It’s akin to a refund policy, albeit with some additional paperwork. Ensuring compliance with this rule keeps everything operating smoothly.

3. Taxable Income for Non-Educational Withdrawals:

Now, let’s delve into the tax implications. Withdrawing income for non-educational purposes incurs taxation at your regular tax rate plus an additional 20%. While students typically enjoy a low tax bracket during their educational journey, this changes when funds are utilized for other purposes.

4. Minimizing Tax Burden with RESP to RRSP Transfer:

Strategic planning can significantly mitigate the tax burden associated with income withdrawal. Consider transferring funds to your Registered Retirement Savings Plan (RRSP) to achieve this. The advantage lies in the fact that income growth from the RESP, once transferred, remains untaxed within the tax-deferred framework of the RRSP.

Managing Limited RRSP Contribution Room

While the maximum transfer amount from RESP to RRSP is $50,000, it’s crucial to ensure you have sufficient RRSP contribution room. For those with limited space, options include:

  • Adding a spouse to the RESP.
  • Waiting to accumulate additional room.
  • Adjusting the salary for small business owners to generate more contribution space.

A step-by-step guide to transferring RESP funds to an RRSP.

Suppose you find yourself in a situation where you’re certain that your child won’t pursue further education, and you’re considering the strategic move of transferring RESP savings to your RRSP. In that case, following a systematic approach is essential for a smooth process. Here are the steps needed to make this move:

Confirm Transfer Conditions:

Before initiating the transfer, confirm that you meet specific conditions outlined for an RESP to RRSP transfer. Ensure each child RESP beneficiary is at least 21 years old and not currently enrolled in post-secondary education. Also, verify that your RESP has been open for a minimum of 10 years and that you have sufficient RRSP contribution space available. Meeting these conditions lays the foundation for a successful transfer, allowing you to take advantage of the tax-deferred benefits.

Check RRSP Contribution Room:

Assess your RRSP contribution room to ensure adequate space for the transfer. Your RRSP contribution room is the maximum amount you can contribute without penalties, as provided by the Canada Revenue Agency (CRA). If your contribution room is limited, consider options such as adding a spouse to the RESP or waiting to build additional room. Understanding your contribution room is crucial for a seamless transfer.

Gather Necessary Documents:

Gather essential documents, including RESP account statements, identification documents, and your RRSP account number. Having these ready in advance speeds up the process when contacting your RESP promoter.

Contact RESP Promoter for Forms:

Reach out to your RESP promoter to request necessary forms for the transfer. Most financial institutions have customer service teams to guide you through the process and provide required paperwork promptly. Fill out forms diligently, ensuring accuracy and completeness. Submit them to your RESP promoter, who will facilitate the transfer of income and coordinate the return of grants to the government.

Considerations and Fees:

Be aware that fees may be associated with the transfer. Your RESP promoter might charge a transfer fee, and there could be an additional fee for closing the account. Depending on your financial institution, you may need to sell investments for a cash transfer. The duration of the transfer process varies, with some completing within weeks and others taking longer. Patience and clear communication with your RESP promoter are crucial.

Following these steps systematically ensures a smooth transfer of RESP savings to your RRSP, optimizing tax benefits and financial planning.

Concluding the matter:

In summary, transferring unused RESP funds to your RRSP can be a smart financial strategy, lowering your overall tax liability. Although there are administrative tasks and possible fees involved, the advantages outweigh the difficulties. Ensuring you comprehend and execute the transfer correctly, especially if your child doesn’t pursue post-secondary education, helps maximize your savings. If you’re contemplating such a transfer, seek personalized guidance from your RESP provider based on your individual circumstances without hesitation.

The information provided above serves solely for informational purposes and reflects the opinions of Super Visa Insurance, subject to change without notice. It is not intended as financial or legal advice and should not be construed as such.
Super Visa Insurance Monthly bears no responsibility for any actions taken based on the information herein. While efforts are made to ensure accuracy and currency, some terms, conditions, limitations, exclusions, terminations, and other policy aspects may not be fully delineated. For comprehensive details, please consult the official policy documents. In the event of any discrepancies, the language within the policy documents shall prevail. All rights reserved.

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