An Accumulated Income Payment (AIP) allows the subscriber to withdraw earned income from an RESP—but it comes at a price.

When withdrawn, AIPs are taxable to the subscriber at the subscriber’s marginal tax rate, and an additional 20 per cent tax is also applied. Still, it might be the solution when a beneficiary doesn't attend school or finishes school without using all the earned income from an RESP.

The RESP account also has to meet at least one of the following criteria before you can withdraw those earned funds:

• the payment is made after the year that includes the 9th anniversary of the RESP and each individual (other than a deceased individual) who is or was a beneficiary has reached 21 years of age and is not currently eligible to receive an EAP (see Note)
• the payment is made in the year that includes the 35th anniversary of the RESP, unless the RESP is a specified plan (see the definition) in which case the payment is made in the year that includes the 40th anniversary of the RESP
• all the beneficiaries under the RESP are deceased when the payment is made

If the RESP meets one of these criteria, you can withdraw the AIP and pay extra at tax time. But you have another option—to reduce or eliminate the amount of tax payable, up to $50,000 of the AIP can be transferred into a Registered Retirement Savings Plan (RRSP). However, you must have RRSP contribution room available to make this transfer.​

RESPs are a valuable education savings vehicle, but some of the rules are complicated. For help setting up or tapping into an RESP, speak with an ATB Wealth advisor​.​​​​​​​​​