If a contributor starts to withdraw income from an RESP, what is the deadline for the plan's termination?

The correct answer regarding the deadline for terminating a Registered Education Savings Plan (RESP) after a contributor starts to withdraw income is that it must be done by February of the following year.

When a contributor initiates withdrawals from an RESP, it signals the beginning of the end of that investment vehicle’s tax-sheltered status for the remaining investments in the plan. The Canada Revenue Agency (CRA) stipulates that once income is withdrawn, the RESP must be terminated by February of the year following the withdrawal. This timeline allows for the performance of necessary administrative duties and ensures compliance with tax regulations relating to the plan.

This deadline serves to facilitate proper reporting and taxation of the accumulated investment income and notifications regarding any grant money that might need to be returned if not used for educational purposes. Such compliance is essential for contributors to avoid potential penalties or unforeseen tax implications.

In contrast, the other options provided do not align with the established rules governing RESPs. They either provide an inaccurate timeframe for the termination or reference irrelevant events not associated with RESP regulations.