Be Forewarned: Move Your RESP BEFORE You Want to Make a Withdrawal

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We started our RESP at a bank then eventually transferred it to a discount brokerage. If and when our children ever get old enough and wise enough to want to use the money, we will have to decide whether to leave it at the brokerage or whether to move it back to a bank. Withdrawal fees will likely play a role in our decision. However while researching another RESP matter, I read a rule that surprised me. It may be important to know about this rule and move your RESP funds to another institution if you want to before you make your first AIP withdrawal.

Can I Transfer my RESP to Another Institution?

While you’re saving, contributing and receiving grants in your RESP, the answer is usually yes. For example, we moved our RESP from BMO to BMO InvestorLine.

However, the government itself limits your ability to transfer your RESP once you start to take money out of it!

You Can’t Transfer a RESP After This Point

According to a guide posted on the Employment and Social Development Canada website:
“RESP transfers are not permitted once an Accumulated Income Payment (AIP) has been made from the transferring RESP. See Chapter 3-3: Options for Assets Remaining in the RESP.”

An accumulated income payment is a withdrawal from the RESP of some of the interest, dividends or capital gains accumulated in the plan.

How stringently is this rule enforced? I don’t know. I have no personal experience with it.

I just thought I would share this now for people to consider and perhaps follow-up with their institution if they were planning to shift their RESP assets once they begin withdrawing from their plan.

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Have you tried to transfer a RESP after you started making withdrawals? Was it possible? Please share your experiences with a comment.

8 thoughts on “Be Forewarned: Move Your RESP BEFORE You Want to Make a Withdrawal”

  1. Cool, and thanks for the heads up! We too have our sons RESP at BMO. I have been thinking of moving it to have more control over the investments, and have thought of transferring to InvestorLine as well. Your post gives me more reason to just do it! I do hope you get some responses from those who are currently withdrawing from the RESP, it would be interesting to know their experience. Thanks – Cheers

    • When we get closer to withdrawing from our RESP, I’m going to be looking very closely into fees and timeliness. I like BMO but I’m never quite sure why as they always seem to get into a tangle of paperwork whenever I try to do something at the branch. I suspect InvestorLine may have withdrawal fees for their RESPs, so I may have to transfer it out of there in a few years.

      I hope I hear some feedback about withdrawals, too, but I suspect many people just suffer through it without discussing it much.

    • Not sure if anyone will see this since the last comment was many years ago.

      I just called the government department that administers RESP rules (888-276-3624. They are very helpful (not kidding)

      We have had an resp with TD Waterhouse for 23 years. I want to move it to CIBC investor’s edge. There was some online debate if that can be done if withdrawals have been made. The answer is yes.

      There are additional details that may apply to your specific situation so best to call them and explain what you are trying to achieve

      hope that helps

  2. I never transferred after withdrawing money for my daughters education, but I did transfer quite a few years ago from a self directed account to a group plan at [a RESP provider]. There was no fees involved, and it was very smooth. The plan earned me an average of about 4% return (I’m not a seasoned investor but I think that’s pretty good), but the part I’m most happy about is that that RESP allowed me to even use the money for my daughter for her studies in Europe.

    We didn’t anticipate that she would be studying abroad, but we were relieved to find out that we could use the RESP money, as I have read that some plans are restricted to only Canadian schools. So while my daughters case is probably not very common, this is something I would recommend looking into when choosing an RESP, because you never know what the future holds.

  3. Interesting nobody has pointed this out – this article refers to AIP, not EAP and it is true you can’t transfer if you have taken an AIP. But an AIP is the type of withdrawal you do when your child won’t be using the money for education. After a normal EAP withdrawal, it is fine to transfer from one bank/broker to another.

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