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    What happens to the RESP that I am contributing to for my child if he does not pursue post secondary education? I have to contribute to the RESP until he is 18 at which time contributions cease. Should he not go on to post secondary, what typically happens to the contributions? Is it left to me to decide if I want to cash it in and give it to him for some other purpose?

  • #2
    Originally posted by RunningMan View Post
    What happens to the RESP that I am contributing to for my child if he does not pursue post secondary education? I have to contribute to the RESP until he is 18 at which time contributions cease...
    You have to contribute? Is the RESP specifically mentioned in a court order or agreement?

    Who is the subscriber(s) for this RESP? Joint RESP, or no?

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    • #3
      Sorry, I should of clarified. I agreed to contribute and it was filed as a consent order. No other stipulations in said consent order other than that I agree to contribute until our son is 18. Mom has her own RESP plan set up and is contributing to one for him independent of me. My own RESP is seperate and the only other name on it is our sons.

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      • #4
        Check with the financial institution where the account is registered. I think for most RESPs the rule is that if the beneficiary does not pursue postsecondary education by the age of 25, the owner of the account (that would be you) has the option of converting the funds into an RRSP (minus the government grant portion). You can't cash the policy in and give the kid the money for anything other than education. (Many RESPs also have a provision that if the beneficiary does not pursue postsecondary education, the money may be used for a sibling - again, check with the institution where the account is registered).

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        • #5
          Originally posted by stripes View Post
          You can't cash the policy in and give the kid the money for anything other than education. (Many RESPs also have a provision that if the beneficiary does not pursue postsecondary education, the money may be used for a sibling - again, check with the institution where the account is registered).
          You certainly CAN withdraw the money and give it to the child. It is your money and you can do what you want with it.

          At my bank, there is an option called NCW (Non-educational Capital Withdrawal)... basically gives you back all the CONTRIBUTED money and is non-taxable. The 20% grants are returned to the government... not clear what happens to the income growth (probably taxable)... but in any event the cash you put in is yours to take out at *any* time.

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          • #6
            Since it is your RESP (you are the only subscriber), that you are using for your child, you can choose to collapse it or withdraw from it anytime, but check with your financial institution, since depending on when/how you do it, there are tax implications (or not). So yeah, if your child doesn't end up going to school, it's your money.

            - Your contributions, you can take out without penalty (check with financial institution, as some say matching stops when you do this, though I'm not sure of that).

            - government grant money, has to go back to the government (if the child doesn't go to school)

            - "growth" or the accumulated income payment (AIP), is yours to take as well, but that part, you will be taxed 20% on. There are ways to avoid the tax penalty (one of them being, transferring it to RRSP).

            If you have another child, and depending on the RESP plan (family), then some will allow your other child to use the money towards school.

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