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Our response:

When you decide to close a Registered Education Savings Plan (RESP), the money in the RESP is returned to contributors (e.g. you, the government if applicable).

1. Your contributions into the RESP are returned to you and you don’t pay tax on contributions that are withdrawn net of any applicable fees.
2. Government contributions such as the Canadian Education Savings Grant (CESG) or the Canadian Learning Bond (CLB) are returned to the government because these funds are intended to be used to pay for post-secondary education.
3. You may be able to get investment earnings out of the plan if it has been open for 10 years and the beneficiaries have not pursued an education by the time they are 31 years old but any earnings are subject to tax plus a penalty. With a group RESP you don’t get back your investment earnings.

Visit GetSmarterAboutMoney.ca to learn about how RESPs work and other options should your child decide not to pursue higher education.  Speak with a registered financial representative or tax professional for advice.