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Government Plans to Allow Divorced and Separated Parents to Open a Joint RESP for Their Children

Government Plans to Allow Divorced and Separated Parents to Open a Joint RESP for Their Children

By:

Posted April 4, 2023

The Federal Budget 2023 proposes to allow divorced or separated parents to open a joint Registered Education Savings Plans (RESP) for one or more of their children or move an existing joint RESP to another RESP provider. The budget also proposes to increase certain RESP withdrawal limits with the increasing tuition cost for post-secondary education.

Before the proposed changes, only spouses or common law parents could jointly enter into an agreement with a RESP provider to open an RESP. Alternatively, if the parties opened a joint RESP during the relationship and subsequently separated, they were permitted to maintain the account post separation. However, separated parents were not permitted to open a new joint RESP post separation or to move the RESP to a different promoter.

When a RESP beneficiary enrolls in an eligible post-secondary program of study, government grants and investment income can be withdrawn from the plan as an Educational Assistance Payment (EAPs). The EAPs are taxable income for the beneficiary.

There are limits on the amount of EAPs that can be withdrawn in the first 13 consecutive weeks of an eligible program. Currently, a student in full time post-secondary school can withdraw a maximum of $5,000 in education assistance payments (EAPs) from their RESP during the first 13 weeks of their enrollment. The new budget proposes amending the Income Tax Act so that full-time students can withdraw up to $8,000 of EAPs during their first 13-week period. For part-time students, the withdrawal limit will increase from $2,000 to $4,000 per 13-week period.

Allowing separated and divorced parents to open joint RESPs will allow parents to continue to be child focused and investing in their children’s education fund for the future. The improved RESP rules may make it easier and more affordable for separated parents to save for their children’s education.

This blog post was written by Alison Boyce, a member of the Family Law team.  She can be reached at 613-566-2081 or at alison.boyce@mannlawyers.com.

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Alison Boyce

Alison Boyce

I joined the Family Law Group at Mann Lawyers in 2021 after gaining extensive experience at a regional law firm in Ottawa. I have a B.A. from Carleton University, obtained my J.D from the University of Ottawa and was admitted to the Ontario Bar in 2015. My practice focuses exclusively on family law and divorce cases and I am experienced in litigation, negotiation, mediation and dispute resolution. My clients trust me to recognize the unique complexities of their case and my approach is solutions based and practical. Experienced with all levels of court in Ontario, including The Court of Appeal for Ontario,  my expertise encompasses complex divisions of property, income disputes, child and spousal support, other financial aspects of family law as well as high conflict parenting and mobility matters. I also have experience advising spouses and lawyers on bankruptcy and family law issues, interjurisdictional issues and Hague Convention matters.... Read More

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