RESP Withdrawal Strategy: Contributions vs. EAP

Key Takeaways

• RESP contributions and EAPs are two different withdrawal buckets — and they are taxed differently.
• Contributions are generally returned tax-free to the subscriber.
• EAPs include government grants, bonds, and investment growth — and are taxable income to the student.
• Many families consider using EAPs earlier while the student is enrolled and eligible.
• Full-time students are limited to $8,000 in EAPs during the first 13 consecutive weeks of enrolment. Part-time students are limited to $4,000 in any 13-week period.
• The best withdrawal order depends on student income, program length, and future education plans.
• Unused grants may need to be repaid if the student stops qualifying.

What is an RESP withdrawal strategy?

When it is time to use your RESP, you have two main pools of money to draw from: the contributions you put in over the years, and something called an Educational Assistance Payment, or EAP. A withdrawal strategy is simply a plan for which pool to use first, how much to take out each year, and why.

This matters more than it might seem. The two pools are treated very differently when it comes to taxes. Choosing an order that works for your family can help you use the money you saved, and the grants you earned, as effectively as possible. Getting the order right can make a real difference.

For a full overview of how RESP withdrawals work, see RESP Withdrawal Rules: How to Access Education Savings, or speak with an Embark Education Savings Specialist for more information.

RESP contributions vs. EAP: what is the difference?

Before deciding on a withdrawal order, it helps to understand exactly what is in each bucket.

	RESP Contributions	EAPs (Educational Assistance Payments)
What it includes	The money you personally deposited into the plan over the years.	Government grants (e.g., CESG, CLB), provincial incentives, and investment growth earned inside the plan.
Who receives it	The subscriber — usually a parent or guardian.	The student (the beneficiary named on the RESP).
How it is taxed	Generally returned tax-free. You already paid tax on this money when you earned it.	Counted as the student’s taxable income in the year it is received.
When it can be withdrawn	Can be withdrawn by the subscriber at any time.	Only when the student is enrolled in a qualifying post-secondary program.
Why it matters for planning	More flexible — useful as a reserve for later expenses or if plans change.	Tied to student eligibility. Unused grants may need to be repaid if the student stops qualifying.

To learn more about how EAPs work, see What Role Do EAPs Play in RESPs?.

Why families often withdraw EAPs first

Many families find it makes sense to use EAPs earlier in the student’s studies, and there are a few clear reasons for this.

The grants and growth inside your RESP were earned in the student’s name. If the student stops qualifying before those funds are used, unused grants may need to be repaid to the government. Withdrawing EAPs while the student is enrolled helps ensure those funds are actually used for education.

Students also tend to have lower income while studying full-time, which can mean less tax owing on EAPs. Available tax credits may reduce the impact further, though this depends on the student’s total income for the year.

Contributions, on the other hand, can wait. Because they are generally tax-free when withdrawn, they offer more flexibility and can act as a reserve for later semesters or unexpected costs.

When withdrawing contributions first may still make sense

EAP-first is not the right answer for every student or every year. Here are situations where withdrawing contributions before EAPs may make more sense:

• The student has higher income this year — a summer job, co-op placement, or large bursary could push their total taxable income up.
• The program is short and most costs fall in the first semester.
• Spreading EAPs over two or three years would reduce the overall tax impact, so it often makes sense to hold some EAPs back for a lower-income year.
• Your RESP provider or plan type has specific withdrawal rules that affect timing.
• You want to preserve EAP room for a future semester when the student’s income will be lower.

There is no single rule that fits every family. Thinking through the student’s expected income before each withdrawal helps you make the most of both buckets. An Embark Education Savings Specialist can also help guide you through the process. Once you’re ready, the withdrawal process takes minutes to start and can be done online from the comfort of your home.

How EAP limits affect withdrawal order

Even if EAP-first makes sense for your family, there are limits on how much EAP you can take out at certain points in the student’s studies.

For full-time students, the limit is $8,000 in EAPs during the first 13 consecutive weeks of enrolment. After those first 13 weeks, this specific cap no longer applies and full-time students can generally request larger EAP amounts, as long as they remain eligible.

For part-time students, the limit is $4,000 in EAPs for any 13-week enrolment period.

These limits matter most in the first semester. If tuition is due right away, you may not be able to cover all costs with EAPs alone. Contribution withdrawals can bridge that gap while you wait for the first 13-week window to pass.

Planning around tuition due dates and semester schedules helps you use both buckets without any unexpected surprises when school starts.

How student income affects EAP timing

EAPs are added to the student’s taxable income in the year they are received. For many students, this is not a large concern. Their income during school is low and available tax credits may reduce or eliminate the tax owing, but it is not always that simple.

Summer jobs, co-op work terms, and part-time employment all count as income. Some bursaries may also increase a student’s taxable income depending on the situation. In a year where the student earns more, a large EAP withdrawal could lead to more tax than expected.

It can help to think across tax years rather than just semesters. If the student will have higher income in one year and lower income in another, timing EAP withdrawals to match the lower-income years can make a real difference.

For more on how RESP withdrawals are treated at tax time, see Are RESP Withdrawals Taxable? and RESPs and Taxes.

Example: a balanced RESP withdrawal strategy

Here is a simple example of how a family might spread withdrawals across two school years.

Period	Approach
Year 1 — First semester	Request EAP up to the $8,000 first 13-week limit. Add a contribution withdrawal to cover any remaining tuition costs.
Year 1 — Second semester	Now past the 13-week threshold, withdraw a larger EAP to cover second-semester costs. Reduce the contribution withdrawal.
Year 2+	Review the student’s income from the previous year. Adjust EAP amounts to match income levels and keep contributions available as a flexible backup.

This is a general example only. The right amounts and timing for your family will depend on actual costs, tuition due dates, and the student’s income each year.

What if the student changes programs, takes a break, or stops school?

Life does not always follow a straight path. Students sometimes change programs, take a gap year, or leave their studies early. This is worth thinking about before you make your first withdrawal.

If a student stops qualifying for the RESP before all the grants and growth have been used, unused grants may need to be repaid to the government. This is one reason many families prioritize EAPs while the student is enrolled — it reduces the risk of leaving grants behind if plans change.

Contributions are more flexible. If the student stops their studies for good, the subscriber can generally get their contributions back without owing tax. However, the grant and investment growth portions are treated differently and may need to be repaid or rolled over.

If there is any chance the student’s education path could change, keeping contributions available while using EAPs first is often a sensible approach.

For more on what happens when a student does not complete their studies, see What Happens to an RESP if It’s Not Used?.

Planning checklist before your first RESP withdrawal

Before you make your first withdrawal, it helps to have these details in hand:

• Proof of enrolment from the student’s school (Embark provides examples to make the process easier for you)
• Estimated costs for the school year: tuition, books, housing, and other eligible expenses
• Tuition due dates and semester schedule
• The student’s estimated income for the year
• Your available EAP balance and contribution balance
• Program length and full-time or part-time status
• Whether other siblings are named in a family RESP plan
• Your provider’s required forms and typical processing times

For more on what qualifies as an eligible expense, visit RESP Eligible Expenses on Embark’s Learning Centre.

If your RESP is held with Embark, you can log in to your account to review your EAP balance and contribution balance separately before requesting your first withdrawal.

Common mistakes families make with RESP withdrawal order

• Withdrawing only contributions and leaving EAPs untouched. This can leave grants and growth unused — or push more tax onto a year when the student earns more.
• Assuming the student will pay little or no tax on EAPs. This is often true, but summer jobs, co-op placements, and other income can change the picture quickly.
• Forgetting the first 13-week EAP limit. Expecting a large EAP right at the start of school without knowing this limit can create a cash flow gap just when costs are highest.
• Not spreading EAPs across tax years. Taking all available EAPs in one year may lead to more tax than spreading them over two or three years would.
• Waiting until after graduation to plan. EAPs can only be paid while a student is enrolled in a qualifying program. The earlier you plan, the more options you have.

For a full overview of RESP withdrawal rules, visit RESP Withdrawal Rules: How to Access Education Savings.

Whether you are making your first RESP withdrawal or planning further ahead, Embark’s Learning Centre and Education Savings Specialists are here to help you feel confident every step of the way. We keep you updated throughout the process every step of the way.

Frequently asked questions

Should I withdraw RESP contributions or EAP first?

Many families consider withdrawing EAPs before contributions because EAPs include grants and growth that may need to be repaid if the student stops qualifying. But the right order depends on the student’s income, program length, EAP limits, and future plans. There is no single rule that fits every family.

Are RESP EAPs taxable to the student?

Yes. EAPs are included in the student’s taxable income in the year they are received. Students with low income during school may owe little or no tax, but this depends on their total income — including employment, co-op earnings, and other sources. For more, see Are RESP Withdrawals Taxable?

Are RESP contribution withdrawals taxable?

Contributions are generally returned to the subscriber tax-free. Because you already paid income tax on this money when you earned it, you do not pay tax again when you withdraw it. Only EAPs are taxable — and only to the student.

Is there a limit on EAP withdrawals?

Yes. Full-time students are limited to $8,000 in EAPs during the first 13 consecutive weeks of enrolment. Part-time students are limited to $4,000 in EAPs for any 13-week enrolment period. After the first 13 weeks, full-time students can generally request larger EAP amounts as long as they remain enrolled and eligible.

What happens if EAP money is left unused?

If the student stops qualifying before all EAPs are used, the grant portion of those unused funds may need to be repaid to the government. Contributions can generally be returned to the subscriber tax-free. See What Happens to an RESP if It’s Not Used?, or speak with an Embark Education Savings Specialist for more details.