Transferring funds from an RESP to an RRSP

Reviewed by Paul Thorne

Saving for a child’s education with a Registered Education Savings Plan (RESP), can help pay for tuition, books, and living expenses during post-secondary education. But what if the child choose a different path or doesn’t use all the RESP funds?

Many people may not realize that you can transfer unused RESP funds to a Registered Retirement Savings Plan (RRSP). Transferring an RESP to an RRSP gives 3 key advantages:

Income tax deferral

Allows you to defer income tax on the amount transferred to an RRSP, though not to a RRIF.

Eliminates penalty tax

A direct transfer from an RESP to an RRSP eliminates the 20% Accumulated Income Payment (AIP) tax.

Increase retirement savings

Redirect unused RESP funds to help fund your long-term retirement planning.

However, before making this decision, it’s important to understand the transfer rules, tax implications, and whether this strategy fits with your overall financial goals.

RESP transfer to RRSP rules

To be eligible for a transfer of RESP funds to an RRSP, you must meet these criteria:

  • AIP-only transfer: Only the AIP portion qualify for the RESP to RRSP transfer rules, not contributions or government grants and incentives.
  • Residency: The plan holder (subscriber) must live in Canada
  • Plan age: The RESP must have been open for at least 10 years
  • Beneficiar(y/ies) age(s): Each beneficiary must be at least 21 years old and no longer eligible for educational assistance payments (EAPs)
  • RRSP contribution room: The plan holder (subscriber) must have enough unused RRSP contribution room

You can also initiate this transfer:

  • if the AIP payment is made in the 35th year after the RESP was opened or
  • all RESP beneficiaries under the plan are deceased.

RESP to RRSP transfer limit: You can transfer up to $50,000 of AIP funds into your RRSP or to a spousal RRSP, if you have the contribution room.

Check your RRSP limit: Your Notice of Assessment from the Canada Revenue Agency (CRA) shows how much RRSP contribution room you have.1

Tax implications of an RESP to an RRSP transfer

If you withdraw RESP investment earnings (AIP) directly, they’re taxed at your marginal tax rate plus a 20% penalty (or 12% for Quebec residents). However, a transfer to an RRSP allows you to defer taxes until you start making RRSP withdrawals.

However, keep in mind:

RRSP withdrawals are taxable. These funds will eventually be taxed as income. This is important to consider in the context of your broader tax plan—especially if future RRSP withdrawals push you into a higher tax bracket or affect other income-tested benefits like Old Age Security (OAS).

RESP to RRSP transfers are not tax-deductible: Transferring an RESP’s AIP to an RRSP doesn’t lower your taxable income like a traditional RRSP contribution does. The transfer is simply a way to defer immediate taxation and to eliminate the penalty tax.

What if you don’t have enough RRSP contribution room?

If you don’t have enough RRSP contribution room to transfer the full RESP AIP amount, but you still want the tax deferral benefits, you have a couple of options:

  • Pause RRSP contributions: You can wait and build up unused RRSP contribution for a few years until you have enough contribution room before making the transfer.
  • Add a spouse to the RESP if they have available RRSP contribution room: This depends on the institution you opened the RESP with, but if allowed, you can add your spouse or common-law partner as a plan holder to use their RRSP contribution room.

If you still don’t have enough space, you may want to consider:

How to handle government repayment

If you withdraw funds from the RESP for non-educational purposes, any RESP government incentives need to be returned.

Most RESP providers will handle this process automatically, but it’s a good idea to check with your provider to ensure there are no surprises when it’s time to make the transfer.

How to transfer your RESP’s AIP to your RRSP

Follow these steps to transfer your RESP’s AIP to an RRSP.

1. Confirm eligibility

Ensure you’ve met the conditions to transfer the AIP in the RESP to your RRSP.

2. Check your RRSP contribution room

Review your latest Notice of Assessment and consider the contributions you made year-to-date.

3. Gather required documents

This includes your account number, institution name, and institution address of the RESP and your RRSP.

4. Contact your RESP provider

In most cases they will provide the transfer forms and will facilitate the transfer of income and return any of the government grants for you.

Additional costs to consider:

  • Transfer fees: Some RESP providers may charge additional fees including transfer and administration fees.
  • Investment liquidation: You might not be able to transfer investments in-kind. Some institutions may need you to sell all the investments, so the transfer is done in cash.

RESP to RRSP FAQs

No, you cannot directly transfer RESP funds to a TFSA.

You can withdraw RESP contributions and contribute them to your TFSA if you have available TFSA contribution room.

Remember: The RESP AIP portion will be taxed first at your marginal rate plus a 20% penalty tax (or 12% for Quebec residents). The after-tax amount can be contributed to your TFSA.

While TFSAs are great for tax-free growth, the tax rules only allow RESP income to be transferred to an RRSP or an Registered Disability Savings Plan (RDSP), assuming you meet the eligibility requirements.

If the RESP plan has not been in effect for 10 years, transferring RESP income to an RRSP is limited. In most case you must wait.

However, an exception applies if all beneficiaries have passed away.

You might want to consider keeping the RESP open in case the child chooses to pursue education later or consider transferring the money to another child’s RESP. If you’re transferring the money to another child’s RESP, the child must be a sibling and must be under 21 years of age when the RESP is opened.

A tax advisor can help determine your best options.

Yes, AIP withdrawals are included in your net income for tax purposes. This may impact eligibility for income-tested benefits, like Old Age Security (OAS). This is a consideration if you’re near retirement or may be drawing on government benefits.

More RESP resources

RESP Calculator

Find out how much you need to save in an RESP to help save for a child’s post-secondary education.

Try the RESP Calculator

Family RESP

Saving for multiple children? A family RESP might be a better option.

Learn more about Family RESP

RESP vs TFSA

Not sure whether to save for your child’s education in an RESP or a TFSA? Compare savings options for education.

RESP vs TFSA: What's the difference?

This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply. Last updated : March 14, 2025.

Legal notes:

1 It’s your responsibility to keep track of your RRSP contribution limits. You can view your contribution limits on your Notice of Assessment, by calling the Canada Revenue Agency’s Tax Information Phone Service (TIPS) or by logging in to your CRA account. Keep in mind that RRSP contribution limits will change from transactions that occur during the year, and which may not be reflected on your Notice of Assessment or with the CRA until a later time. Reach out to a Sun Life advisor to discuss further.

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