What Happens When an Education Savings Plan in Canada Expires

“Education Students at Westfield State University”

Expiration or the voiding of an Heritage RESP can happen when the plan remained unclaimed 36 years after it was opened by the subscriber, or the person who has signed up for it.

In rare instances, some plans are unused for this amount of time, and the people who are affected by the voiding of the plan are often at a loss as to what will happen to all their contributions.

To better understand the composition of an RESP or registered education savings plan, take note that in Canada, the government sponsors part of the contributions of education savings plans.

It does so through the Canada Education Savings Grant (CESG) or the Canada Learning Bond, otherwise known as the CLB. If the beneficiary of the education savings account is below the age of seventeen at the time that that the RESP was opened, the government often uses bonds to pay contributions.

A subscriber may decide to contribute to the savings plan whenever he/she likes, but take note that there are specific instances when monthly, quarterly, or annual payments have to be regularly paid.

In short, you cannot just open an registered education savings plan and pay when you remember to. There is still a contributions structure to mind, and if you do it correctly, you will be able to withdraw payments from the savings account in due time.

Any person can be the beneficiary of an Heritage Education Funds RESP, even yourself. Both children and adults are valid beneficiaries of registered education savings plan. This just has to be made clear later on when you actually sign up for one through a financial institution or a scholarship fund dealer.

What happens when an RESP expires? In the event that you have conscientiously made payments for 36 years after you have signed up for an RESP, the Canadian government will probably take back all its contributions. Again, these will be from contributions made through either the CESG or CLBs.

As for the person who has subscribed to the plan in the first place, he/she will have the option of claiming back payments made toward the account in the first place. Three criteria will allow the subscriber to claim both payments and interest earned.

The first criteria is that the child or children in the plan are at least 21 years old at the time, and are not eligible for a college or university program that is qualified under Canadian law. The payments are termed EAPs or educational assistance payments.

The second criterion is that the beneficiary is a bona fide Canadian citizen. And finally, we have the age of the RESP. The subscriber may be allowed to take back contributions/payments and interest earned when the RESP was still valid if the plan itself is at least 10 years old.

So technically speaking, the older the plan is, the better your chances of regaining your payments if for any reason your child decides not to pursue qualified training or a college degree after secondary school.