You can transfer RESP money to an RRSP

That can be immensely frustrating – in fact, some people have lost thousands of dollars in this way because until recently all income earned in an RESP was forfeited if the beneficiary couldn’t use it. You got your principal back, but the income went into a general scholarship fund or to a designated school, depending on the plan.

Now you can get some of the income back, however. Recent budget changes allow anyone in this position to transfer up to $50,000 from an RESP to an RRSP. There’s just one catch: you must have the RRSP contribution room available.

If you don’t, you can draw out the money from the RESP as income, but you’ll pay tax at your marginal rate plus a 20% penalty. So there won’t be a lot left.