Contributing more than $50,000 lifetime to a beneficiary's RESP accounts triggers a costly penalty. The most common cause is poor coordination between family members who each open separate RESP accounts for the same child. Here's how to recognize, fix, and prevent over-contributions.
Every contribution made by every subscriber to every RESP for the same beneficiary counts toward the $50,000 lifetime cap. If a parent contributes $35,000 and grandparents contribute $20,000 to separate plans for the same child, that is a $5,000 over-contribution — triggering the penalty immediately.
Common scenarios: grandparents open a plan without knowing the parents have already contributed heavily; lump-sum gifts in a single year from multiple family members; confusion about whether lifetime contributions include only current-year amounts; or transferring in from another plan without checking room first.
Withdraw the excess from one account's contributed principal — not from grants or investment income. Contact your RESP provider and request a contribution withdrawal, specifying it is to correct an over-contribution. The grant portion remains untouched. Document the transaction and file T1E-OVP with the CRA to report the months of excess and pay the penalty.
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