How to Complete RC4625 RESP to RDSP Rollover

When a child or young adult with a disability is unable to pursue post-secondary education, the funds accumulated in a Registered Education Savings Plan (RESP) may seem stranded. Fortunately, Canadian tax rules allow the income portion of an RESP to be rolled over into a Registered Disability Savings Plan (RDSP) under certain conditions, avoiding the punitive taxes that would otherwise apply. Form RC4625 facilitates this rollover.

Background: RESP and RDSP Basics

Quick tip: download the official RC4625 first, then fill it while following this guide: Download RC4625 form (official CRA).

A RESP is a tax-sheltered savings plan for a child's post-secondary education. Contributions grow tax-free, and the government provides matching grants through the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB). A RDSP is a long-term savings plan for individuals with disabilities who are eligible for the Disability Tax Credit. The government provides the Canada Disability Savings Grant and Canada Disability Savings Bond for eligible individuals.

When a RESP beneficiary cannot attend post-secondary education due to a disability, rolling the RESP income into their RDSP redirects those savings toward long-term financial security without punitive tax consequences.

Eligibility for the Rollover

All of the following conditions must be met:

• The RESP beneficiary is also the beneficiary of an RDSP (or becomes one before the rollover).
• The RESP beneficiary is eligible for the Disability Tax Credit with a valid T2201 on file with the CRA.
• The RESP has been open for at least 10 years, OR the beneficiary is at least 21 years old.
• There are no other eligible RESP beneficiaries who could use the funds for education, or all beneficiaries are at least 21 and not currently enrolled in qualifying education.
• The RESP is being collapsed (closed) in connection with the rollover.
• The rollover amount does not exceed the available RDSP contribution room (lifetime limit of $200,000 minus previous contributions).

What Can Be Rolled Over

Understanding the components of a RESP is essential:

• Contributions: The original money put in by the subscriber. These are returned to the subscriber tax-free when the RESP is collapsed.
• Government grants (CESG and CLB): These must be returned to the government when the RESP is collapsed if the beneficiary did not pursue qualifying education.
• Accumulated income: The investment growth earned inside the RESP. This is the portion that can be rolled into an RDSP using Form RC4625.

Without the rollover, the accumulated income would be subject to regular income tax plus an additional 20% penalty tax if withdrawn as an Accumulated Income Payment (AIP). The RC4625 rollover avoids both of these taxes on the transferred amount.

How to Complete Form RC4625

Step 1: Obtain the Form

Download Form RC4625, "Rollover from a Registered Education Savings Plan to a Registered Disability Savings Plan," from the CRA website.

Step 2: Complete Section 1 (RESP Information)

Enter the RESP contract number, the name and address of the RESP promoter (financial institution), and the name and SIN of both the RESP subscriber and beneficiary.

Step 3: Complete Section 2 (RDSP Information)

Enter the RDSP contract number, the name and address of the RDSP issuer, and the name and SIN of the RDSP beneficiary (must be the same person as the RESP beneficiary) and the RDSP holder.

Step 4: Specify the Rollover Amount

Enter the amount of accumulated income being rolled over. This cannot exceed the available RDSP contribution room.

Step 5: Obtain Signatures

The form requires signatures from the RESP subscriber, the RDSP holder, and representatives of both financial institutions.

Step 6: Process the Transfer

Submit the completed form to both financial institutions. The RESP promoter processes the withdrawal and the RDSP issuer accepts the deposit. Funds transfer directly between institutions; you do not receive the money personally.

Tax Implications

The primary benefit is avoiding the tax and penalty that would otherwise apply to RESP accumulated income:

• The rolled-over amount is not included in anyone's income at the time of transfer.
• The 20% additional tax on Accumulated Income Payments does not apply.
• When funds are eventually withdrawn from the RDSP, they will be taxed as income to the beneficiary, who is likely to have a lower income and therefore pay less tax.
• The rollover amount reduces the RDSP's available contribution room, which may affect future Canada Disability Savings Grants.

What Happens to Government Grants

When you collapse a RESP, unused CESG and CLB amounts must be returned to the government. The grants cannot be transferred to the RDSP. Only the accumulated income is eligible for rollover. The original subscriber contributions are returned directly to the subscriber and are not taxable.

Preparation Steps Before Filing

• Ensure the beneficiary has an approved T2201 on file with the CRA.
• Open an RDSP for the beneficiary if one does not already exist.
• Calculate the RDSP contribution room ($200,000 lifetime limit minus previous contributions).
• Contact both financial institutions to confirm they can process the rollover.
• Confirm the RESP meets the closure conditions.

Related Resources

• Guide to T2201 Disability Tax Credit Certificate
• How to Fill Out T3012A for RRSP Excess Contributions
• Guide to T1 Schedule 1 Federal Tax Calculation
• How to Apply for the Canada Child Benefit
• How to Fill Out BC428 Provincial Tax Credits

Frequently Asked Questions

Can the RESP subscriber and RDSP holder be different people? Yes. Both must sign the RC4625 form, but they do not need to be the same person.

Is there a time limit? The rollover must be completed in connection with the collapse of the RESP. Coordinate with both institutions to process it promptly.

What if the RDSP beneficiary is a capable adult? They can serve as both the RDSP beneficiary and holder. If they are unable to manage their finances, a legal representative serves as the holder.

Can I do a partial rollover? The rollover is specifically for the accumulated income when the RESP is being collapsed. You cannot keep the RESP open for other purposes while doing a partial transfer of the income portion.

Final Thoughts

Form RC4625 provides a valuable tax-efficient pathway for families who saved for education through an RESP but need to redirect those funds to support a beneficiary with a disability. By rolling the accumulated income into an RDSP, you avoid punitive tax treatment and redirect savings toward long-term financial security. Work with your financial institutions and consider consulting a financial advisor to ensure the rollover is handled correctly.

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Download This Form

Before you submit anything, download the latest official file here: Download RC4625 form (official CRA). Always use the latest version.

Related internal guides

• IMM 5257 guide
• IMM 1294 guide
• IMM 1295 guide
• IMM 5409 guide
• IMM 5532 guide

Official external resources

• Download RC4625 form (official CRA)
• IRCC forms and guides library
• IRCC document checklists
• CRA forms and publications
• IRCC processing times

Navigating RESP and RDSP Eligibility as a Newcomer

For newcomers to Canada, understanding the nuances of financial programs like the Registered Education Savings Plan (RESP) and the Registered Disability Savings Plan (RDSP) can feel complex. While the RC4625 rollover process is specific, knowing your initial eligibility for these plans is crucial. Both RESPs and RDSPs require the beneficiary to have a valid Social Insurance Number (SIN) and be a resident of Canada. For RESPs, contributions can be made by anyone, but government grants like the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) have specific residency and income criteria. Newcomers should be aware that while they can open an RESP soon after arrival, eligibility for the CLB, in particular, often depends on family net income and can take some time to establish, especially if previous tax returns in Canada are limited. Understanding these details can help you plan your savings effectively. Our Benefits Finder can help you explore various government programs you might be eligible for, including those related to education and family support. For a deeper dive into tax implications, consult our comprehensive Tax Guide. Similarly, for RDSPs, the beneficiary must be eligible for the Disability Tax Credit (DTC). Applying for the DTC is often one of the first steps for families with a child living with a severe and prolonged disability. This process can take time, so it's advisable to start as early as possible. Once DTC-approved, the individual can then be the beneficiary of an RDSP, unlocking significant government contributions through the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB). For detailed information on the Disability Tax Credit and how to apply, visit the official Canada Revenue Agency (CRA) page: Disability Tax Credit (DTC) – Canada.ca.

Beyond the Rollover: Holistic Financial Planning for Families

While the RESP to RDSP rollover is a powerful tool for specific circumstances, it's just one piece of a larger financial puzzle, especially for newcomers building a life in Canada. For families supporting a child with a disability, a comprehensive financial plan goes beyond savings accounts to ensure long-term security and quality of life. Consider integrating the RDSP into a broader strategy that might include wills, trusts, and other investment vehicles. A well-structured will can ensure that assets are distributed according to your wishes, and a Henson Trust, for example, can protect an RDSP beneficiary's eligibility for provincial disability benefits. Navigating these complex financial and legal considerations can be challenging, but essential for peace of mind. WelcomeAide offers several tools to help you manage your finances more broadly. Use our Cost of Living Calculator to understand expenses across different Canadian cities, helping you budget effectively. Our Banking Comparison tool can guide you in choosing the right financial institutions and products for your family's needs. For personalized guidance on complex financial questions, our AI Navigator can provide quick answers and point you to relevant resources. Additionally, exploring government support programs for persons with disabilities is vital. You can find more information on federal disability benefits and programs on the Employment and Social Development Canada (ESDC) website: Disability in Canada – Canada.ca. Seeking advice from a qualified financial planner specializing in disability planning is also highly recommended to tailor a strategy that best suits your family's unique situation.