Can I transfer my RESP to my RRSP in Canada?

Yes — you can transfer the accumulated income portion of an RESP (called an Accumulated Income Payment, or AIP) directly to your RRSP or spousal RRSP, up to a lifetime maximum of $50,000. The transfer avoids the normal 20% AIP penalty but still uses your RRSP contribution room. Your original contributions return to you tax-free separately. CESG grants must be repaid to the government regardless.

What are the conditions to transfer RESP funds to an RRSP?

Four conditions must all be met: (1) The RESP has been open for at least 10 years; (2) The beneficiary is at least 21 years old and not currently enrolled in a qualifying program; (3) You are a Canadian resident; (4) You have sufficient RRSP contribution room. The transfer is limited to $50,000 lifetime per subscriber, across all RESP plans.

What happens to the CESG grants when I transfer the RESP to an RRSP?

CESG grants must be repaid to the government when the RESP is closed and the AIP is taken — they cannot be transferred to an RRSP. The CESG and investment earnings generated by the CESG are returned to ESDC. Only the subscriber's investment earnings on their own contributions (not on grants) form the AIP that can be transferred to the RRSP.

What is the 20% AIP penalty and how does the RRSP transfer avoid it?

If you take RESP accumulated income as cash (not as an RRSP transfer), it is added to your income AND subject to an extra 20% penalty tax. At a 43% marginal rate that becomes 63% tax. The RRSP transfer avoids the 20% penalty — the AIP enters the RRSP using your contribution room, and you pay your regular marginal rate only when you withdraw from the RRSP in retirement.

Can I transfer RESP funds to a spousal RRSP?

Yes. The AIP can be transferred to your own RRSP or to your spouse's or common-law partner's RRSP, using the spousal RRSP contribution rules. The $50,000 lifetime transfer limit applies regardless of whether you use your own or spousal RRSP.

Can You Transfer an RESP to an RRSP in Canada?

What Can and Cannot Be Transferred

When closing an RESP and transferring to an RRSP, understand what each component of the RESP is:

RESP component	What happens on closure
Your original contributions	Returned to you tax-free — no RRSP needed
CESG grants	Repaid to the government — cannot transfer to RRSP
Investment earnings on CESG	Repaid or subject to AIP penalty — cannot transfer to RRSP
Investment earnings on your own contributions	Become the AIP — can transfer to RRSP (up to $50,000)

Only the investment earnings on your own contributions — not the contributions themselves, not the grants — are the AIP eligible for RRSP transfer.

The 4 Conditions: All Must Be Met

CRA requires all four conditions before allowing an AIP-to-RRSP transfer:

Condition	Details
Plan age	The RESP must have been open for at least 10 years
Beneficiary age	The beneficiary must be at least 21 years old
Beneficiary not in school	The beneficiary is not currently eligible for EAPs (not enrolled in qualifying post-secondary)
Canadian resident	You must be a Canadian resident at the time of the transfer
RRSP room	You must have sufficient room — the AIP uses your RRSP deduction limit

If any condition is not met, the AIP cannot be transferred and you would be subject to the 20% penalty if you take the earnings in cash.

The $50,000 Lifetime Transfer Limit

The AIP-to-RRSP transfer is capped at $50,000 per subscriber, lifetime. This limit applies across all RESP plans you hold as subscriber.

If your AIP across all plans is $30,000 → transfer up to $30,000
If your AIP is $75,000 → transfer up to $50,000; the remaining $25,000 is taken in cash as an AIP (with the 20% penalty)

Why the RRSP Transfer Is Valuable: Tax Math

Assumptions: $40,000 AIP, 43% marginal rate

Option A: Take AIP in cash	Option B: Transfer to RRSP
Income tax: $40,000 × 43% = $17,200	RRSP contribution: $40,000
+ 20% AIP penalty: $8,000	Tax savings now: $40,000 × 43% = $17,200 back in tax refund
Total cost: $25,200	Tax paid later in retirement (likely at lower rate)
Net kept: $14,800	Net kept: $40,000 → invested until retirement

The RRSP transfer can save tens of thousands of dollars compared to taking the AIP in cash.

CESG Repayment Calculation

When you close the RESP, the grants must be repaid. CRA tracks this separately through the T4A slip issued by your RESP provider:

Box 40 on the T4A: CESG repaid to government
Box 40A: Investment earnings on CESG (subject to AIP treatment or returned to government)

Your provider handles the mechanics of returning the CESG to ESDC — you do not write a separate cheque. The repayment is accounted for automatically when the plan closes.

Step-by-Step: How to Do the Transfer

Confirm eligibility: Verify the plan has been open 10 years, the beneficiary is 21+, not in school, and you have RRSP room
Check your RRSP room: Confirm on your CRA My Account or last Notice of Assessment
Request AIP designation from provider: Contact your RESP provider and request an Accumulated Income Payment directed to your RRSP
Provide RRSP account details: The provider transfers directly to your RRSP — you do not receive the cash first
Provider issues T4A: You receive a T4A for the year showing the AIP transfer; report it on your tax return using the RRSP contribution deduction to offset the income inclusion

What If the RESP Has Significant Earnings and Limited RRSP Room?

If your AIP exceeds $50,000 (or your RRSP room is less than the AIP), the excess is subject to the 20% penalty. Strategies to minimize this:

Make large RRSP withdrawals in prior years to free up re-contribution room (not simple or advisable in most cases)
Contribute to spousal RRSP if your spouse has more room — combined you may have room to shelter the full AIP
Stage the AIP over multiple years if the plan conditions allow the RESP to remain open without triggering the AIP deadline (the 35-year plan rule)