RESP Withdrawals: How to Take the Money Out the Smart Way (and Avoid Paying Tax You Don’t Have To)
(Five-minute read time)
Remember that RESP you set up years ago? It’s almost time to put the savings to good use.
If you’re a parent of a high school student, your RESP is about to shift from a saving tool to a spending tool.
And here’s the problem:
Many families spend years doing a great job building their RESP… then unknowingly give back thousands in unnecessary taxes when it’s time to withdraw it.
The good news?
With a simple strategy, you can maximize RESP benefits, minimize RESP taxes, and get the most out of every dollar you’ve saved.
TL;DR – How to Withdraw from an RESP the Smart Way
Use the taxable portion first (EAP): Withdraw grants + growth early while your child has low income to minimize RESP taxes—often resulting in little to no tax payable.
Spread withdrawals over multiple years: Keep your child in a low tax bracket by planning RESP withdrawals annually, especially during lower-income school years.
Save contributions for later: Your original contributions are always tax-free, so use them last for maximum flexibility.
Take advantage of tax credits: Tuition credits and the basic personal amount can offset RESP income, helping you maximize RESP benefits.
Adjust for income changes: Reduce withdrawals in years when your child earns more (co-op, summer jobs) to avoid unnecessary tax.
Avoid common mistakes: Don’t withdraw contributions first or leave taxable RESP funds unused—this is where most families lose money.
Plan early: The best RESP strategies for parents start 1–2 years before withdrawals begin, not after school starts.
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For years, you’ve likely heard the same advice when it comes to RESPs: start early, contribute consistently, and take full advantage of government grants. That advice is absolutely right—RESPs remain one of the most powerful tools for helping your child pay for post-secondary education. And whether you started when they were young or just recently, it’s never too late to make meaningful progress.
But here’s the part most families overlook: how you take the money out matters just as much as how you put it in.
As your child approaches graduation, your RESP is about to shift from a long-term savings plan into a short-term withdrawal strategy. Done properly, you can maximize RESP benefits and minimize taxes. Done poorly, you can leave money on the table or pay more tax than necessary.
Let’s walk through how to withdraw from your RESP the smart way—so you get the full value of everything you’ve built.
What’s Actually Inside Your RESP?
Before we talk strategy, you need to understand what you’re withdrawing.
Every RESP has three components:
Your Contributions
The money you put in. Completely tax-free when withdrawn
Government Grants (CESG, etc.)
Free money from the government. It’s taxable to your child when withdrawn
Investment Growth
Earnings inside the account. This is also taxable to your child
👉 The key concept:
• Grants + Growth = EAP (Educational Assistance Payments)
• This is the taxable portion
Here’s where RESP planning gets interesting.
When your child starts post-secondary education, they typically have:
• Little or no income
• Tuition tax credits
• Low tax rates
That creates a window of opportunity where you can withdraw more of the taxable RESP income… and pay little to no tax.
This is the core of any good RESP withdrawal strategy.
The Smart Way to Withdraw from an RESP
If you remember one thing from this article, make it this:
Withdraw the taxable money first, while your child is in a low tax bracket. Save the tax-free money for later.
Let’s break that down.
⸻
Step 1: Start with EAP (The Taxable Portion)
When your child begins school:
• Prioritize withdrawing grants + growth first
• This is when their income is lowest
This is how you minimize RESP taxes.
In many cases, families can withdraw:
• $15,000–$20,000+ per year
• And pay little or no tax
⸻
Step 2: Spread Withdrawals Across School Years
Don’t pull everything out at once, and don’t let the money sit there until the final year of school.
Instead:
• Plan withdrawals year by year
• Keep your child’s income within a low tax bracket
Watch for:
• Summer jobs
• Co-op programs
• Scholarships
👉 Adjust withdrawals accordingly.
⸻
Step 3: Use Contributions Last
Your original contributions:
• Are always tax-free
• Have no urgency
So:
• Use them later in the program
• Or anytime flexibility is needed
⸻
A Real Example: How This Works
Let’s say your child starts university with:
• Minimal income
• $8,000 of tuition
In Year 1, you could:
• Withdraw $15,000+ of EAP
• Offset it with:
• Basic personal tax credits
• Tuition credits
👉 Result: Little to no tax payable
Now compare that to the common mistake:
• Taking contributions first
• Leaving taxable EAP for later years
In that case:
• Your child may have higher income later (co-op, job offers)
• You lose the low-tax window
• And end up paying more tax overall
Common RESP Withdrawal Mistakes
This is where most families go wrong. Let’s recap some things you should think twice about.
❌ Taking contributions first
Feels natural—but it’s backwards from a tax perspective
❌ Not withdrawing enough early
You miss the lowest-tax years
❌ Ignoring changes in student income
Co-op or part-time income can impact tax strategy
❌ Leaving grant and growth money unused
This can create complications later
❌ Waiting until the final year to figure it out
By then, your options are limited.
Most RESP mistakes aren’t about investing—they’re about how the money comes out.
What Happens If You Get It Wrong?
If RESP withdrawals aren’t handled properly:
• You may pay more tax than necessary
• You could struggle to withdraw all taxable funds efficiently
• In worst-case scenarios, leftover growth can be taxed at high rates
That’s why planning ahead matters.
RESP Strategies for Parents (Simple Checklist)
Here’s how to stay on track:
Review your RESP before your child starts school
Plan withdrawals year-by-year—not all at once
Prioritize EAP withdrawals early
Adjust for:
Summer jobs
Co-op income
Ensure grants and growth are fully used
When Should You Start Planning RESP Withdrawals?
Ideally:
• 1–2 years before your child starts post-secondary
This gives you time to:
• Understand your RESP structure
• Estimate future withdrawals
• Align with tax strategy
How This Fits Into Your Bigger Financial Plan
RESP withdrawals don’t happen in isolation.
They connect with:
• Your cash flow as a parent
• Your child’s income and expenses
• Tax planning opportunities
• Even broader financial decisions (like debt, savings, or investments)
Getting this right isn’t complicated—but it does require intention.
Get Professional Advice
Hello, I’m David Pipe. At WealthTrack, we can help you reach your financial goals — book a free 15-minute call with us today to find out how to get started.
Final Thought: Don’t Leave This to Chance
You’ve already done the hard part—you’ve saved.
Now it’s about using that money the right way.
A well-planned RESP withdrawal strategy can:
• Maximize RESP benefits
• Minimize RESP taxes
• And ensure your child gets the full value of what you’ve built
Next Step: Let’s Build Your RESP Withdrawal Plan
If your child is in high school or heading to post-secondary soon, now is the time to get this right.
I help families create simple, practical RESP withdrawal strategies that:
Reduce tax
Maximize flexibility
Fit into your broader financial plan
👉 Book a quick call with me and we’ll map out your RESP withdrawal strategy together.
No complexity. Just clarity—and a plan you can actually use.
Interested in Building Wealth? Reach out Today!
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