Components of the RESP Withdrawal: PSE and EAP
When a withdrawal is made from a Registered Education Savings Plan (RESP) for a qualified or specified education program, what is the tax treatment of each component?
Post Secondary Education (PSE)
Education Assistance Payment (EAP)
Example: Imagine a Family RESP where both beneficiaries are withdrawing from the plan. Student A has a part-time job and is in a higher tax bracket than Student B. You can allocate the PSE portion (non-taxable) to Student A and allocate the EAP portion (taxable) to Student B, to reduce taxes paid, if any.