I have read a number of articles on the best way to withdraw RESP money from a tax perspective. I never kept them because we are not at that stage with our grandchildren.

If you google this, as I did, and poke around a little you will no doubt find the several articles on this very subject. IMy goal would be to withdraw as much no tax or low tax dollars as was possible in any one tax year. . Any extra I would place in an account outside the RESP. Then worry about the rest.

 

Thanks to all that responded, it was very helpful in helping me break my spin of overthinking and I think have a clearer strategy. I will do my best to respond what I am learning towards to show your comments were not wasted.

If you google this, as I did, and poke around a little you will no doubt find the several articles on this very subject.
My goal would be to withdraw as much no tax or low tax dollars as was possible in any one tax year. . Any extra I would place in an account outside the RESP. Then worry about the rest.

I did a lot of research before asking, hence why I was over thinking. Most articles assume only one degree and don't talk about post graduate. However, your goal of withdraw as much as possible with no or low tax is what I needed to remember for the RESP. Everything else in terms of 'fairness' and funding the education is a different issue.

#1 with modifications: As you know EAPs are taxable to the student. So you want to withdrawal to the max you can pull out without paying cash taxes. They will more than likely earn more each successive summer so the tax shield drops. I'm not sure what province you are in - consider more than $15k earlier and taper.

I can elaborate but it seems you have done your homework.

As a final comment - consider the RESP drawdown strategy as related, but different than who gets what. Keep the drawdown schedule simple - its an after tax optimization exercise. You can manage the overall spend per child separately.

Yes, this is what I needed to remember. I will treat the RESP withdrawals strictly from a tax perspective. I considered the effects of certain scholarships already, but forget that they will be earning income in the summers, (my kids are there yet). So take as much as possible when there is no or low income.

I would not overthink it and I would do a version of Option 1. The key is to use up the EAP and investment gains early on while student incomes are low. Forget about post-grad because by that time, earnings will have risen to taxable income territory in most cases. A post-grad student should be self-funding anyway.

The object here is NOT to stretch it out as long as possible or even make it equitable to each child. Inequities are fixable with gifting. Just get the EAP and investment gains out of the plan early on.

We still plan to help with post grad, but based on this, but the goal will to pull out the EAP as tax efficiently and quickly as possible. It is most likely we will have one in their 3 or 4 year and another in grad school, so I will adjust accordingly depending on other incomes.


Summary more for me when I come back to this in about 2.5 years time:

• With RESP in most tax efficient way by withdrawing the EAP as quickly as possible considering the tax brackets
• Treat 'fairness' and the actual funding of the university separately which I already plan to manage with a joint account with each kid (figure out the fairness at the end)
• Don't worry about extending the time for the post grad,
• Take out more as early as possible, since they will may increasing income over the years

 

#1 with modifications: As you know EAPs are taxable to the student. So you want to withdrawal to the max you can pull out without paying cash taxes. They will more than likely earn more each successive summer so the tax shield drops. I'm not sure what province you are in - consider more than $15k earlier and taper.

I can elaborate but it seems you have done your homework.

As a final comment - consider the RESP drawdown strategy as related, but different than who gets what. Keep the drawdown schedule simple - its an after tax optimization exercise. You can manage the overall spend per child separately.

 

This is exactly what we did for both our son and our daughter. Our primary concern was getting monies out tax free, or at the lowest rate. We were able to get most out tax free. Just wish we had started the program earlier. Did not make the same mistake with our grandchildren.

This is free money and it grows tax free. Always surprised when I hear about the low take rate on the program.

 

We will have funded 16 years of University when our last one graduates in 2023 so we have essentially done what you are planning to do with your children.

RESP money alone may not be enough!

With one student left we have about $30k to cover the last two years in the RESP before fully exhausted and we will add non RESP money.

All three of them lived away from home so around $20k to $25k per year Tuition and living on Average

As you know EAP is taxed in the hand of the student so assuming no other income you can draw out enough each year in EAP to not trigger income tax this money will go into their Bank account and they will receive a T4A.

PSE is totally tax free and can be withdrawn out any time by you and can go into your account.

There is no accountability on what you spend this RESP money on but to withdraw you will have to provide evidence of enrolment in University/Colleges to access.

Banks have no clue in reality about the RESP process in my experience so make sure you keep good records.

Good luck with your Journey

Future University costs - A good Reference

https://knowledgefirstfinancial.ca/learn-about-resps/future-education-costs.aspx

Maximum RESP withdrawal
There is a $5000 limit (or $2500 if the student is enrolled part-time) on EAP contributions during the first 13 weeks of schooling. There is no limit on the amount of Subscriber (PSE) contributions that can be withdrawn. Once the 13 weeks has passed, any amount of EAP contributions can be withdrawn.
NOTE: each beneficiary can receive a maximum $7200 in government grant/bond for full-time education, or $3600 for part-time. Anything in excess of that must be paid back to the government. Track the EAP portion carefully, especially if you have a family plan.
If the costs of the program are more than the limit, your financial institution holding the RESP can apply to the Minister of Employment and Social Development for approval to withdraw more. You can get more information here.

From one source but a good guide - RESP Withdrawal Rules | Wealthsimple

 

We will have funded 16 years of University when our last one graduates in 2023 so we have essentially done what you are planning to do with your children.

RESP money alone may not be enough!
With one student left we have about $30k to cover the last two years in the RESP before fully exhausted and we will add non RESP money.

All three of them lived away from home so around $20k to $25k per year Tuition and living on Average

Our goal was to fund all of their education, but I am not sure it will be enough. We currently have about $220k in their RESP's and another $50K In trust accounts. If that isn't enough, then we will be delaying our retirement. In fact based our retirement date based on when we thought the youngest would finished a post grad. If they go further or internationally, then they will have to fund some through scholarships and work. I really hope it's enough though.

 

I would not overthink it and I would do a version of Option 1. The key is to use up the EAP and investment gains early on while student incomes are low. Forget about post-grad because by that time, earnings will have risen to taxable income territory in most cases. A post-grad student should be self-funding anyway.

The object here is NOT to stretch it out as long as possible or even make it equitable to each child. Inequities are fixable with gifting. Just get the EAP and investment gains out of the plan early on.

 

I have a healthy RESP and two kids. One 21 ad one 18.
21 yo has done 1 sem of college, the another two rounds of night school 2 courses at a time, one round that turned online.
He wants last two for his certificate, design studio courses, to be in person, so that is on hold.

We pulled 5k first, then 15k just before christmas same year. Plus original contribution withdrawn 30k.tax free
Pushed up his taxes, but I paid the bump, and put the cash in wifes non reg.

Then next year in night school we pulled 17K and another original money 30K withdrawn.

The EAP he has been getting is small because very healthy gains, so the cap wd are a move to try to push the needle on more EAP pay out in future when his school gets under way again

In the mean time once kids turn 18 we pour 6k every year of the money we have sucked out of the resp and stashed in non reg into their TFSA accounts.

 

We have never had the view that the RESP should be split evenly between our children or our grandchildren. It is an edu fund. We assume that our children may aspire to different levels of education and possibly at very different cost levels-either tuition or living.

So when we withdrew, we certainly did not withdraw with a view that we should withdraw even amounts for both. This was not why we set up the fund.

We withdrew based on costs, based and our children's tax position, and heavily based upon the maximum amount that we could possibly withdraw without either child incurring tax or a minimal of tax on the monies. After than, funds would be provided based on need.

 

Fully agree with Ian. Overall, it is simply a tax advantaged education fund with taxpayer support. Disburse it with tax efficiency in mind.

 

It's my understanding (someone on this forum said) that there isn't even really a requirement for the funds to actually go to the child or university at all? or really even for the children to even know that an RESP exists.. You just process the withdrawal by providing the bank a copy of their university invoice (which I guess you'd need to get from your child), and then deposit the funds to your own chequing account. As far as the bank is concerned the transaction is done there. There is still taxable income in the child's name, but you can pay that from other funds.

So as far as fairness/depositing to whom and when for each child, that is (I believe) fully at your discretion.

Myself this is the main aspect of the RESP that would make me feel OK about using it. I would not want to be hamstrung or obligated to providing the child or the university certain amounts of money at certain times that wasn't at my discretion. What if the kid is up to no good in second year and you are having a hard time with them, and then you just need to dump 10k into his bank account because the RESP plan says so? No thanks.

Myself I would be more inclined to only pay for part of their education anyways, even if I had $100k in there which could cover it all... All things being equal, I'd rather give them 50k for their school, make sure they are pursuing work opportunities and paying their own 50k, and then later when they've graduated and all is well, surprise them with a 50k gift for a house down payment or something.

 

I do not know whether those EAP withdrawals have to be deposited in a bank account in the child's (student's) name. I would think so but remember it is the plan sponsor who determines how much EAP (within plan limits) is withdrawn at any given time anyway, so the plan sponsor is in control.

 

Yes, the plan sponsor owns the plan and the money it contains. As such, EAP withdrawals can go to the subscriber's account.
That's what I have been doing. @peterk has it right, both in methodology and purpose.

 

^ Right, that's what I thought. I am unclear on if what I said is actually "fully allowed" (keeping all withdrawn money away from the child's account or from being paid to university) and if it is just something that is a technicality and the banks/government have no interest or ability to check. Anyways my intent wouldn't be to withhold money from the children or "scam the system" anyways, just to ensure that I'm staying in control of dolling out money as I want and can withhold if I really think I need to.

Another RESP question/comment - I believe the rule is you can carry forward grant up to double the annual amount ($500 to $1000) and contribute later without losing grant (years 9-15 instead of years 0-14). I don't see why I would not do this and defer contributing if I still have excess TFSA or RRSP contribution room. Growth in either of those accounts for retirement would be preferable than in the RESP.

I feel a lot of people have a goal of growing the RESP and considering it as some completely separate pot of money that should be grown as large as possible "for the children". When really all that matters is collecting the grant money, and minimizing total lifetime taxes (with some NPV adjustment) to the whole family as a as part of your entire portfolio.

I'm sure the RESP math comes out ahead of unregistered for high income people. Does it still for low income parents? or parents who could use TFSA instead with their excess TFSA room? The child really needs to be in a no-income situation from age 17-21, which I don't think is usually the case, and is probably not desirable from a parenting perspective either, for the RESP to have its benefit shine. Otherwise the kid is paying some 20-25% tax on every dollar of EAP, and this is in only 5-15 year since you deposited (not that long of a deferral time). Whereas TFSA will pay no tax ever, and unregistered low income will pay little dividend tax, and low capital gains, which can be deferred for decades.

 

There is also the interesting strategy - for the more wealthy - of contributing all 50k at year 0, and forgoing the grant money other than in year 0. This actually beats contributing all along and receiving the grant with only a ~3% rate of investment return due to the "early growth" and deferring taxes for a full 18-20 years instead of only ~10.

I think this would only be for people with high incomes, and all other registered accounts maxed, and investment money to burn sitting in unregistered that they are paying high dividend tax rates on.

 

Plugging Along: just to clarify. When I said withdraw the maximum EAP within the tax shield I meant subject to RESP laws. The law around this is pretty clear and is part of the Income Tax Act. Just to elaborate a bit since there seems to be a lot of noise on this. The child beneficairy has to be enrolled in a recognized program. The maximum that can be withdrawn as an EAP is what the actual expenses are. There is nothing to say they have to use their own savings or scholarship before use of EAP, but it is clear that one should not make an EAP that exceeds the cost. Expenses are of course more than just tuition and include living expenses etc so it’s not hard to get north of $20k if a strident leaves home to go to school. CRA publishes a number that administrators use as a maximum EAP in year to limit the need to ask for justification every time. For 2021 this is $24,676. It’s indexed to inflation and published annually. If the costs are higher the administrator is supposed to take reasonable steps to verify before paying.

 

Thanks for the clarification. I am aware of the rules and tax implications. I don't imaging I will have more than $25K in EAP for the 8 years of schooling. Since I will be treating the withdrawals as a tax minimization strategy, I will target >$20K (minus any other income the kids will have) a year in EAPs this should also account for the tuition and education credits. We have other funds to draw from to help fund their education if needed.

 

It is only the EAP that has limitations, and only for the first semester for all practical purposes. In the case of BMOIL, EAP payments are only made to the beneficiary and the beneficiary gets the T4A. That is fine with me as that was the intent anyway.

Gov't would be happy to see accelerated withdrawals after the initial limitation to minimize their ultimate contribution to the cause.

 

So I looked it up and it was not difficult to find the rules pertaining to maximums.

Educational Assistance Payments (EAPs) - Canada.ca

Information on Educational assistance payments

www.canada.ca

for studies in a qualifying educational program

– $5,000, for the first 13 consecutive weeks in such a program. After the student has completed the 13 consecutive weeks, there is no limit on the amount of EAPs that can be paid if the student continues to qualify to receive them. If there is a 12-month period in which the student is not enrolled in a qualifying educational program for 13 consecutive weeks, the $5,000 maximum applies again;

and of course I stand corrected on the issue of who gets paid the withdrawal. Thanks oldgreyguy.

The promoter can only pay EAPs to or for a student if one of the following situations applies:

 

and of course I stand corrected on the issue of who gets paid the withdrawal. Thanks oldgreyguy.

In the case of BMOIL, EAP payments are only made to the beneficiary and the beneficiary gets the T4A.

This was not my experience at BMOIL.

I asked for EAP withdrawals, and directed that the money (or securities -- you can also make withdrawals 'in kind') go to my account. No problem.

In fact, you can see the option to send the funds to the subscriber's account on BMOIL's withdrawal form:

I can't speak to what other institutions do. But restricting EAP withdrawals to the beneficiary does not make sense to me -- payments may well be made up front by the subscriber, who wishes to be reimbursed.

Personally, I would escalate if told the EAP withdrawal could not go to my account.

 

EAP has a yearly limit

RESP Bulletin No.1R1 - Canada.ca

Cette page fournit des renseignements utiles aux émetteurs (compagnies d'assurance, société de fiducie et banques) sur les Régimes enregistrés d'épargne-études (REEE).

www.canada.ca

PSE is unlimited

 

I am talking about the requirements. I have no doubt the intention was for the money to be used for education, hence probably why TD wants some letter of direction for withdrawals over $24K. Most other companies do not care about that. I am just saying there is no requirement to prove the money went to education expenses. You can literally make up anything once you prove your child is enrolled. Say your kid eats well at school and spent it all on caviar. No one really cares.

Hopefully we are clear on that. That was the important correction I wanted to make.

 

I always remember the money being directed to the subscriber. As I said, it does seem kind of unfair that one person would get the money when another would get the T4 slip so perhaps CRA wants the money to go the beneficiary. I know the subscriber is the one who signs the form and authorizes it all and for the most part, no one from the financial institutions really cared where or how the money was spent.

 

I believe that the way to reduce or eliminate the chance of ever being a subject to a CRA desk audit on RESP is to ensure that your withdrawals of any taxable amounts are reasonable and that the student(s) has claimed edu fees and other reasonable expenses during the year. Stay between the guideposts and you should never be bothered by CRA.

 

Jamie Golombek's FP column this week details the best way to withdraw funds as well as the tax perils of not pulling accumulated income out of the plan. Hope this is not paywalled. If so google it on your own account.

Nothing new, but well presented on how to best pull out the three types of monies an RESP account.

How to best withdraw funds from a large RESP with minimal tax

Jamie Golombek: If you take money out as an AIP years later you could pay a tax rate that could exceed 70 per cent

financialpost.com

 

Going back to the original post, the question was about withdrawing from the RESP in in the most tax efficient and FAIR manner. I think a lot has been said about tax efficiency, but not so much about fairness.

I am wrestling with this issue myself at the moment. Kid #1 has finished 3rd year uni, got lots of scholarships, went to a local university, so is still living at home. The total out of pocket cost for her education has been almost nothing so far. Kid #2 is just starting 2nd year, got fewer scholarships, and is attending a university that is out of commuting range, so she is living on campus in a rented condo. The total cost for her education will be significantly more.

So, what is fair? Should we look at it as from a perspective that we will simply fund their education regardless of cost differences, or should we set aside a certain amount, like $100k for each kid, and whatever we don't spend on university is their graduation gift? Is it fair or unfair to give Kid #1 a bonus because her education cost less?

 

Going back to the original post, the question was about withdrawing from the RESP in in the most tax efficient and FAIR manner. I think a lot has been said about tax efficiency, but not so much about fairness.

I am wrestling with this issue myself at the moment. Kid #1 has finished 3rd year uni, got lots of scholarships, went to a local university, so is still living at home. The total out of pocket cost for her education has been almost nothing so far. Kid #2 is just starting 2nd year, got fewer scholarships, and is attending a university that is out of commuting range, so she is living on campus in a rented condo. The total cost for her education will be significantly more.

So, what is fair? Should we look at it as from a perspective that we will simply fund their education regardless of cost differences, or should we set aside a certain amount, like $100k for each kid, and whatever they don't spend on university is their graduation gift? Is it fair or unfair to give Kid #1 a bonus because her education cost less?

So we had three at University using the RESP but my statement to them was if you could get scholarship money to cover then we would still provide some of the money.

All of them got some small scholarship money which I let them use for themselves and I paid them back if automatically used towards their education

Hard to be fair as life is not fair our oldest did 6 years of university fully funded and our second did 5 years and our last one will at least do 5 years in 2023.

 

I simply do not see what fair has to do with pulling as much money out of a family RESP as quickly and at lowest possible amount of tax payable with paying for children's edu costs.

My perspective is that this is a tax avoidance issue first and foremost. Obtain the maximum after tax benefit possible from a good program. Then concern yourself with 'fairness'.

We treat an RESP is simply one source of money to pay for children's edu expenses. No different than our HISA account. Not the only one. Fair does not mean, to us, drawing equal amounts of a family RESP for each child. It means treating them equally from a total edu funding perspective based on their individual requirements. If the RESP is depleted before the last child is finished does this mean that you will no longer help fund your child's edu expenses if you are financially able to do so?

Our son required more edu funding than our daughter. RESP did not enter into it. Edu expenses did. So....we supported both equally. But one cost more than the other. This will be the situation with most parents.

Our best advice....take full advantage of the RESP program. Draw as much money out tax free or at a low tax rate as quickly as possible while you can. Start with emptying funds in the AIP bucket, then move to the grant bucket. It is a program that too few parents/grandparents take advantage of.

 

Start with emptying funds in the AIP bucket, then move to the grant bucket.

^^I agree with your thinking and strategy.

Re the above, I think you meant EAP.
If you're taking out AIP funds (growth not used by the beneficiary in a plan windup) it means you've handled things wrong!

 

I'm not entirely convinced university will be a worthwhile endeavor 15-20+ years from now, both the cost and what the benefit is. Who knows how the economy will be, the university system will be, or what kind of life my kids will want to lead, or be able to lead.

I'm a bit concerned that if I have 100k RESP just waiting there for them, that I'd be inclined to motivate them to go ahead and get that degree, even if it's not the right choice for them. If I do start a RESP, I'm not in any rush (can start at year 8 and still get all the grant) and I'd probably keep it conservatively invested, to minimize the balance at withdrawal time.

Besides if you have any RRSP or TFSA room at all, then the math makes no sense to contribute to the RESP before year 8. Those other accounts are still better for long term growth investments and tax avoidance/deferral.

 

I have been spinning, aka over thinking, most likely because my first just entered high school and am wondering how the heck did this time go so fast. Just thinking about strategies on how best to help them fund their post secondary in the most tax efficient and FAIR manner. I am typing this out will help me stop spinning and get some advice from those wiser here.

Some pieces of information that may (or may not) be important:

• Current value is about $215k depending on the day in a single family plan
• Full $50k has been contributed for oldest plus max grant received
• Next year, will be the last contribution for the youngest to get her final grant and will complete the $50k
• As of 2022, it will be $100k contributions and $120k+ in EAP, most like more during time when she enters school

• Two kids - oldest will start to access the funds in 3 years
• Youngest will access fund in 6 years.
• It's 99% sure they will go for a 4 year degree somewhere in Canada, maybe at home, mostly like not.
• They have both indicated that their interests will require at least another post graduate degree. Based on their personalities, and capabilities, I would say this is quite realistic.

-The oldest has indicated for the post graduate degree she would like to try in the US$$$$$$$$. She is very set on law, business, big data analytics, or something politics related (but not a politician)
- The youngest has indicate that she would like to study in Europe for her post graduate, but that's a pretty long ways. She is less decided on her career path, but knows she wants a 'profession' She is considering investment banking, business, or medicine (though she doesn't enjoy science as , so I don't see that in the future).

• Our goal is to gift a debt free education to our kids to whatever level they go. This would also include us delaying our retirement if required, but defiantly not preferred. I am not sure if this is feasible if they go out of country or continue with a Phd (most likely not)
• There is also a decent chance on scholarships for them if not requiring financial need as a criteria, but who knows.

• In withdrawing the money, we would like to do it in the most tax effective way possible
• We are trying to be 'fair' that if one child uses less because they choose a less expensive option (living at home or less expensive program, more scholarships, ect), we would like them to be able to transfer their remaining 'share' to the TSFA or something.

I am guessing that if both my kids go post graduate or goto the US, the RESP won't cover everything, and we do have in trust accounts for them if they don't get scholarships. If they get more in scholarships, or from work, etc, then we are okay gifting them the remainder.

My questions:
With the probability of more than one degree for each child (but not guaranteed), is it better to take out the EAP for the first degrees, in case the second degree doesn't happen, or spread it the withdrawals over the both degrees for both kids?
For example, if I take current balances. There's about $120k EAP + $100K contribution.

Option 1: Plan based on just first degree
2 kids, 4 years each. $120K /2 /4 so take about $15k taxable each year to cover the first degree
Use the remaining contributions and other sources to fund the post grad.

Option 2: Plan based on both kids going to post grad
2 kids, 4 years each, $120K/2/6 so about $10K taxable each year to cover both degrees

Option 3: Just take out EAPS based on child's income for that year to maximize gains.
Concerned that this could lead to unfairness if one gets more scholarships or ends up working.

I did these examples as really quick ones, I do understand about tax brackets and things, I am just starting to think of considerations of essentially do I plan for an undergrad only or undergrad AND post grad for each kid when withdrawing RESPs.

Just starting to get the wheels going and look for thoughts and considerations.

Canadian Moneysaver magazine had an article late last yr. I stopped subscribing this yr. I provided the issue to my sister with 2 teens. Sorry, article was about what to do if kid doesn't decides on no post-secondary studies when there's a RESP.

 

i may have seen it. However, the chances of neither of my kids are going to post secondary is rather slim. I am faced with the opposite as both have plans for multiple degrees and our RESPs will not cover the costs

 

Hope they get a bursary, scholarship or ...a job. Only 1 person in my extended Canadian family got a degree in the U.S. He had scholarship at Harvard.

 

UPDATING THIS TO A MONEY DIARY FOR UNIVERSITY!!! Yeah!

Afters of planning and ups and downs, my oldest in University. I have decided to turn this into a form of a Money Diary on how were funding things. This is to serve a log for when second goes to school (so I don't forget) and hopefully others can benefit from our lived experience. Alot of this is for me to work out in head how to navigate through this. I am sure I am making more difficult than needed, but I need a thinking space. Here is a good space with smart folks if I am missing or overthinking things.

Some randoms updates for context on my oldest

• Studying locally due to health issues (this has been the downs), however she got into Residence at the last minutes
• Tuition and residence, living will be less this year is much less than I originally planned as if she was ON, so that's an up

Not included in the above numbers, but we will still pay for as we are figuring things out)
- all NEEDS
-medical expenses (dental, glasses, meds, counselling, etc)

• School supplies, my kid is REALLY picky about her stationary, and anything needed to help her excel in school (pretty vague for now)
• set up cost for res (we had to do a crazy shop in with out a few days to move in when we found out)
• Any food or anything she wants to take from home when she visits (hopefully she does visit, but not every weekend)
• Items to help her transition into the University experience, we will pay for club and extra curricular fees
• General items for her mental and physical health

She is responsible for:

• partying
• anything she spends over the $200 not included above
• nonessential shopping or wants - to be negotiated as she is still learning that there are things that both have a need and want component. She needs a school bag she doesn't need a designer brand tote.

I am sure that we have missed things, but generally, we will pay for all of her needs, and anything that helps further health and schooling.

Some of the financial stuff (didn't put in the numbers for what she has, due to it feeling too detailed)

• Just prior to starting school: RESP (for both her and sibling) $XXXK
• In trust accounts $XXK cash account (this is our cash cushion) + $XXk invested

Tuition & fees (semester 1) ~$5000 so far, will update this with a final number, as it doesn't include books, apparently, most them are on line with digital subscription
Residence w/ 5 day meal plan $8700
Monthly budget $200/month (to cover weekend food and whatever else) Will most likely update this

• RESP withdrawal - took just over a week once I submitted the paperwork to my FA
• $8000 this is the new max amount for the first 13 weeks. Make sure to do this as soon as the confirmation letter is available. This will allow us to withdraw and additional amount after 13 weeks in December to maximize the tax benefit
• The $8k was 100% EAP. I was surprise the grant vs interest/income was predetermined by a formula by CRA. I wanted the full grant taken out first. It was not allowed.
• Money was deposited into my account

• Loans - we didn't think our kid would be eligible, but I had her fill it out any ways with student financial aid, since this is what you have to do for government scholarships, grants and bursaries.
• Eligible for a small loan, which was paid 1/2 directly into her bank account for this semester, and the other half in Jan.

- Scholarships - small amount due to her health problems

The plans & activities

• between the $8000 RESP, Loan amount, and scholarship, it will cover almost exactly her tuition & res
• for this year in December, we take out out of the EAP the max amount we can so it's tax free using the following formula

= (Fed basic exemption $15705 + 2024 Tuition ~$5000) - ((income for 2 pt jobs ?$6K (need to confirm)- *Canada Employment Amount $1368) + $8000 EAP - gains from selling in trust holdings/investments ?$1K- Scholarship after $3K exemption) = so maybe another $5K (will need to double check the numbers and math slips come in)
- will remove her spending budget out from the cash intrust portion.

Formula
Tax Free RESP WITHDRAWEL AMT = (Fed Basic Exemption + Tuition Credit) - ((Employment Income-Canada Employment Amount)+(Scholarship net $3k Scholarship Exemption) + Investments Income)

• Fix/restart her TFSA from her intrust (bank screwed it all up when we first set it up on her 18 birthday).
• Goal of the TSFA was for her savings that she earned over the years, and use it as a holding place for money that we didn't expect (loans, scholarships). She may not need the money right now, but the RESP will most likely run out for her second degree.
• Move the money that that we have in holding from her in trust that she saved from her PT jobs into the TFSA
• Move the equivalent of her scholarship from her in trust account (this is the amount we would had to cash in if there were no scholarships)
• When 2025 TSFA amount comes in, add the loan amount in the TSFA
• There may not be enough room in the TSFA for now, I am debating opening a FHSA but may just leave the money in trust.

Will update more as i find out more.
Edit to update the formula

 

The plans & activities

• between the $8000 RESP, Loan amount, and scholarship, it will cover almost exactly her tuition & res
• for this year in December, we take out out of the EAP the max amount we can so it's tax free using the following formula

= (Fed basic exemption $15705 + 2024 Tuition ~$5000) - (income for 2 pt jobs ?$6K (need to confirm) + $8000 EAP - gains from selling in trust holdings ?$1K) = so maybe another $5K (will need to double check the numbers and math slips come in)
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Congrats!

For the tax estimate here are a couple of considerations to help refine the estimate;

Assuming the jobs were employment income, a couple of items to add to the tax shield; she will also get a deduction for the Canada Employment Amount (in 2023 it was $1368 or the income which ever is less), and base CPP paid.

There may also be medical expenses? Note the method of claim is different once the child is 18. Line 33099 on her return now and Line 33199 on yours.