TRANSFERRING AN RESP

You may transfer all or part of the RESP to another Promoter. While the subscriber provides the information needed to facilitate the transfer and provides authorization by signing the required forms, the RESP transfer process involves the cooperation of the transferring and receiving RESP Promoters and The Canada Education Savings Program (CESP).

There are certain implications when transferring to another Promoter including those defined below.

1. Transfers are subject to the Income Tax Act (ITA) and may have tax implications:
• Tax penalties may apply unless one of the following conditions is met:
1. Both the transferring and receiving plans have a common beneficiary.
   OR
2. A beneficiary under the receiving plan is under 21 years of age and is a sibling of the beneficiary in the transferring plan.

Failure to meet the above conditions may result in an over-contribution and may require the subscriber to pay 1% per month of penalty taxes on the amount over- contributed.

Important Note:
Even if the over-contribution is withdrawn, the amount over contributed will reduce the lifetime contribution limit.



2. Transfers must meet certain conditions to ensure the beneficiary’s continued eligibility for the education savings Grants;



Incentive	Conditions for an eligible Transfer
Basic & Additional CESG	Both plans have a common beneficiary. OR A beneficiary of the receiving plan is under 21 years of age and is a sibling of a beneficiary in the transferring plan. AND The receiving plan is an individual (non-family) plan or a family plan in which all beneficiaries are siblings. OR No Additional CESG has been paid into the transferring plan. AND The receiving plan complies with all conditions applicable to registering Education Savings Plan (ESP) since January 1, 1999, as required by the Income Tax Act (ITA).
Canada Learning Bond	The beneficiary of the receiving plan is the same as the beneficiary of the transferring plan. If the CLB is transferred, it must be between CLB accounts in an RESP held for the same beneficiary. AND At the time of the transfer, the receiving plan is for the beneficiary or, where there is more than one, every beneficiary is a sibling of every other beneficiary. AND The receiving plan complies with all conditions applicable to registering Education Savings Plan (ESP) since January 1, 1999, as required by the Income Tax Act (ITA).
Alberta Provincial Grant	Both plans have a common beneficiary. OR A beneficiary of the receiving plan is under 21 years of age and is a sibling of a beneficiary in the transferring plan. AND The receiving plan is an individual (non-family) plan for the beneficiary in question. OR The receiving plan is an individual (non-family) plan for a sibling of the beneficiary. OR The receiving plan is a sibling-only family plan.

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Important Note:
If a transfer is "ineligible" with respect to the Grants, the subscriber will have to repay the CESG, CLB and/or Alberta Grant to HRSDC.



3. Transfers may impact the contribution history and the effective date of the plan.

EFFECTIVE DATE OF THE PLAN

According to the Income Tax Act (ITA) the effective date of the plan must be the earliest of the sending or the receiving plan transfer. The effective date is used to determine the following dates for the receiving plan.



1. When contributions tot he RESP must end. (the 31st year following the year on which the plan was entered into. 35th year in case of the beneficiary with disability)
2. When the RESP must be terminated. (35th year following the year in which the plan was entered into. 40 years in case of a beneficiary with disability.)
3. When Accumulated income Payments (AIPs) can start.

CONTRIBUTION HISTORY

When transferring funds to another RESP, the receiving plan assumes the contribution history of the transferring plan, except when one of the following two conditions is NOT met:

• Both the transferring and receiving plans have a common beneficiary.
  OR
• A beneficiary under the receiving plan is under 21 years of age and is a sibling of the beneficiary in the transferring plan.

Important Note:
A Transfer is not permitted once an Accumulated Income Payment (AIP) has been made.




PARTIAL TRANSFERS

The above conditions still apply however there are additional items to consider when transferring only part of the RESP such as:

1. The transferring RESP Promoter must calculate and transfer an equal portion per beneficiary of the Contributions, Earnings, CESG, and Alberta Grant to the receiving plan.
2. The CLB is excluded from this calculation. (The CLB must be isolated if included in a transfer. The subscriber can choose to transfer all, part, or none of the CLB when making a Partial Transfer. The CLB does not have to be transferred in the same proportions as other assets in the plan. Because the CLB is an entitlement for a specific child, the CLB is excluded when calculating the market value of the RESP to determine proportions. When any CLB amounts are being transferred, they must be deposited to the account in respect of the beneficiary who originally received the CLB payment(s). Isolating the amount of CLB in this manner allows HRSDC to continue tracking the CLB entitlements for each eligible beneficiary.
3. The Receiving RESP Promoter will then ensure monies are deposited into the corresponding accounts in the RESP

Important Note:
The transferring RESP Promoter needs to notify the receiving promoter the following information:

1. Unassisted Contribution Pre 1998 (Contributions invested before 1998 into grandfathered accounts that have never received Grant).
2. Unassisted Contribution Post 1998 (Contributions invested after 1998 that were not eligible to receive grant because the maximum grant was already paid).
3. Assisted Contribution (Contributions made to the RESP that have attracted CESG payments).
4. Canadian Education Savings Grant (Combination of Basic and Additional Grant paid to the account).
5. Canada Learning Bond (Introduced in 2004 to provide an incentive for children in modest income families).
6. Alberta Centennial Grant (Introduced in 2005 by the provincial government to provide incentive for Alberta residents).

Form required to process a RESP transfer between two respective promoters:
HRSDC Transfer Form - HRSDC SDE 0050

Steps Required: