RESP money left over after graduation

You can either transfer the money to another registered account or withdraw and pay tax on it.

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From the February/March 2014 issue of the magazine.

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MONY01_ASKMONEYSENSEQ: What can be done with RESP money that is left over after a student graduates?

—Lynda Pappas, Mt. Pleasant, Ont.

A: A student with money left over? That seems as unlikely as a student with time left over during exam week or beer left over after a keg party. But if it happens, what can be done? If the government grant and investment earnings have already been used up, the capital that remains can be withdrawn. Lenore Davis, a financial planner and senior partner at Dixon, Davis & Co., says if there are still investment earnings left, “this may be transferred to an RRSP owned by the RESP plan owner, if that person has RRSP room.” Or the grant money and earnings can be withdrawn and taxed in the student’s hands up to six months after the child has left school. “After that point, the contributor will have to pay tax on the earnings and grants will be returned,” says Ron Graham, a financial planner and accountant. “The contributor will also have to pay a penalty tax of 20% of the investment income.” It’s best to withdraw the money while the student is in school, or, if there are siblings, you may be able to add them as beneficiaries so they can use the money (to throw a really awesome keg party).

Bruce Sellery is a speaker and author of The Moolala Guide to Rockin’ Your RRSP. Do you have your own personal finance question? Write to us at

2 comments on “RESP money left over after graduation

  1. First I wanted to say that I do appreciate the advice and information that you have provided here. I did want to call you out on glamorizing the drinking myth of university and college campuses. As a recent graduate of university planning for my children to go to university I can say that I and most people I know never attended a “Kegger”. Please stop perpetuating the myth that you have to he a hard core drinker during post secondary education to have fun.


  2. I started to ask a question already but lost it, maybe sent it already. It was unfinished. Sorry if I’m repeating myself.

    My daughter has RESPs from her Great Uncle (great in more ways than one, who is now deceased. I have received the statements for these RESPs for many years. Who gets taxed on any remainder? Can I personally transfer what’s left to daughter within 6 months of completion of school and, and will she be taxed?

    Thank you.


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