Human Resources and Skills Development Canada
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Human Resources and Skills Development Canada

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Canada Education Savings Program - RESP Provider User Guide

RESP Provider User Guide

1.0 Introduction

2.0 Education Savings Incentives

3.0 Transfers and Payments

4.0 Appendices

Chapter 3-3: Options for Assets Remaining in the RESP

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6. Forfeited CESG and Earnings on the CESG in Group Plans

The Canada Education Savings Act and new Regulations stipulate:

"CESG amounts and the earnings generated on them may only be shared among the beneficiaries of the RESP."

The term "RESP" used in Section 18(1) of the Regulations refers only to the individual contract itself and not the group RESPs under the same specimen plan.

As a result, forfeited CESG and forfeited earnings on the CESG can no longer be redistributed amongst group RESP cohorts after July 1, 2005.

While any forfeited CESG amounts must be repaid to Human Resources and Skills Development Canada (HRSDC), forfeited earnings can be managed in one of these ways:

  • As an Accumulated Income Payment (AIP).
  • As a payment to a designated educational institution.

These options are outlined in more detail within this chapter.

Forfeited CESG and Earnings – Prior to July 1, 2005

For those contracts that reached maturity in 2002, 2003, and 2004, and contained forfeited CESG and earnings under the prior CESG regulations, RESP Promoters were holding these monies in lieu of requests for Educational Assistance Payments (EAPs) as per the terms of contracts with subscribers.

Any CESG and any earnings on the CESG that were forfeited by a beneficiary before July 1, 2005, and were awaiting disbursement amongst the remaining beneficiaries of that cohort, will be deemed to have been paid into a receiving beneficiary's plan at the time of the initial allocation.

This means that only amounts forfeited prior to July 1, 2005, may be distributed to the remaining age cohort.

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Date Modified:
2011-10-20