RESP Guide
Your child isn't going to university. Here's what happens to the RESP.
Four options, in the order of how much money each one keeps in your family — and the one deadline that quietly decides which are still available.
Short answer
What happens to an RESP if the child does not attend post-secondary?
Nothing happens automatically — the plan can stay open for up to 35 years. When you do wind it down, contributions return to you tax-free, the CESG is repaid to the government, and the growth is handled one of three ways: transferred to a sibling, rolled into your RRSP or a spousal RRSP with available room (up to $50,000), or withdrawn as an Accumulated Income Payment taxed at your marginal rate plus 20%. The RRSP rollover is nearly always the best of the wind-down options.
Reviewed by Johnathan Pollock · Updated 2026-01-15
First: check whether the program actually disqualifies
Parents routinely conclude the RESP is dead when it isn't. Qualifying programs are broad: Ontario college diplomas, apprenticeship and trade programs, CEGEP, part-time studies of at least 12 hours a month, and many foreign and online institutions.
A child heading into an electrical or HVAC apprenticeship, a paramedic program, an aviation college or a coding diploma is very often studying at a designated institution. Check the CRA designated-institution list before touching the account — a qualifying program preserves every dollar of grant.
Option 1 — Wait. Do nothing.
This is the most underused option and it costs nothing. Plans run 35 years from opening. A gap year, a couple of years in the field, then a return to college at 23 is extremely common — and grant paid out as an EAP at 23 is worth exactly as much as at 18.
There is no reason to collapse a plan the year your child turns 18. Reduce risk in the portfolio, stop contributing, and leave it.
Option 2 — Move it to a sibling
In a family plan, redirecting to another beneficiary is administrative — the grant generally follows, provided the sibling is under 21 and their lifetime CESG remains at or under $7,200. Any excess grant is repaid.
Between individual plans, a sibling transfer is still possible but the age and grant-limit tests are stricter. Have the provider run the grant-repayment calculation before instructing the transfer, not after.
Option 3 — Roll the growth into your RRSP
If the plan has existed at least 10 years and the beneficiary is 21 or older (or has died, or is disabled), you can transfer up to $50,000 of accumulated income into your RRSP or a spousal RRSP, to the extent you have unused contribution room. Done this way there is no 20% penalty and no immediate tax.
This is a planning trigger, not a formality: if you have been contributing to an RESP for 18 years, you may also have unused RRSP room from the same period. We routinely find enough room to absorb the whole balance. If you don't have room, deliberately not contributing to your RRSP in the year before the rollover creates it.
Option 4 — Take the AIP and pay the tax
The last resort. The growth is added to your income and taxed at your marginal rate plus an additional 20%. For an Ontario parent already in a high bracket, that combination can exceed 60% on the growth portion.
Two ways to soften it: take the AIP in a low-income year (retirement, a business loss year, a parental leave), and split the wind-down across two calendar years so the income does not stack into the top bracket.
The four options, side by side
| What matters | Keep the plan | Sibling transfer | RRSP rollover | AIP withdrawal |
|---|---|---|---|---|
| Grant kept? | Yes | Usually | No — repaid | No — repaid |
| Tax on growth | Deferred | Deferred | Deferred (in RRSP) | Marginal rate + 20% |
| Main requirement | Plan under 35 years old | Eligible sibling | RRSP room; plan 10+ yrs | Plan 10+ yrs, beneficiary 21+ |
| Best when | Plans may change | Another child is studying | You have unused RRSP room | No room and cash is needed |
Know the contribution/growth split before you decide
The wind-down decision turns entirely on how much of the balance is contributions versus grant and growth. Model it first, then pick the route.
Run the numbersFrequently asked questions
- What happens to RESP money if my child does not go to university?
- Your contributions come back to you tax-free. The CESG is repaid to the government. The investment growth can be moved to another beneficiary, rolled into your RRSP (up to $50,000 of room), or withdrawn as an Accumulated Income Payment taxed at your marginal rate plus an extra 20%.
- Does college or an apprenticeship count for RESP purposes?
- Yes. Qualifying programs include college diplomas, CEGEP, many trade and apprenticeship programs, and certain online and foreign institutions. The program must be at a designated educational institution and meet minimum length and hours requirements — far more programs qualify than most parents assume.
- Can I move an RESP to a sibling?
- In a family plan, yes, and the grant usually follows as long as the sibling is under 21 and their lifetime CESG stays under $7,200. Between individual plans a sibling transfer is also possible; grant repayment can be triggered if the receiving beneficiary is 21 or older.
- How much tax do I pay on an AIP?
- The Accumulated Income Payment is added to your income at your marginal rate, plus an additional 20% tax (12% federal plus 8% provincial in Quebec). Rolling into RRSP room instead avoids both.
- How long can an RESP stay open?
- Generally 35 years from the year the plan was opened (40 for a specified plan). There is no need to make a decision at 18 — many families keep the plan open through a gap year, a trades apprenticeship or a later return to school.
Sources
Written and reviewed by Johnathan Pollock
Managing Partner, Thompson & Pollock Wealth Inc. — Amazon best-selling author of The Entrepreneur's Toolkit.
Last reviewed 2026-01-15
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