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Financial Information
Missed RESP Payments

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Registered Education Savings Plans (RESPs) -> Missed payments

What Happens if we Miss a Payment or Cancel the RESP?

Consequences of missed payments or RESP cancellation depend on the type of RESP (See What types of RESPs are available?), and the individual contract.  It is extremely important to understand the terms of the RESP contract before signing.

Possible consequences of missed payments, depending on plan:

bullet interest may be charged
bullet membership in the plan may be terminated

Consequences of cancellation of the RESP:

bullet Canada Education Savings Grants (CESGs) must be repaid
bullet subscriber contributions may be returned to the subscriber tax-free, after all fees are deducted

Further consequences of cancellation, depending on the type of plan:

bullet earnings may be forfeited
bullet earnings may be paid to the contributor as Accumulated Income Payments (AIP), with tax paid at marginal tax rates plus 20%
bullet earnings may be rolled  into the contributor's RRSP, if contribution room is available, thus avoiding the taxes
bullet for more information see How are funds paid out of the RESP, and are they taxable?.

Tip:  Make sure you understand the terms of the RESP contract before signing!

Revised: September 20, 2017

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