Registered Education Savings Plan (RESP)

What Is a Registered Education Savings Plan (RESP)?

A registered education savings plan (RESP) is a government-registered, tax-deferred savings plan that can help any Canadian family save for their child’s education. Thanks to the Canada Education Savings Grant (CESG), the Government of Canada will provide a matching grant of 20% on top of any RESP contributions you make up to a maximum $500 per year and $7,200 over the lifetime of your account. This makes an RESP a simple and predictable way to grow your wealth to invest in your child’s future.

How do RESPs Work?

Any Canadian family can open an RESP for their child; all your child needs to qualify is a social insurance number (SIN). RESPs present several major advantages over other types of savings accounts:

  1. The Canada Education Savings Grant: which is an RESP grant designed specifically for families saving for their child’s education.
  2. RESP contributions are tax-deferred until they’re withdrawn. Because of RESP withdrawal rules, when your child withdraws the funds, they will most likely be in a lower tax bracket than you, and as such, your contributions will be taxed at a lower rate.
  3. RESPs have no annual contribution limit, so you can contribute as much or as little as you want, whenever you want, up to the lifetime RESP contribution limit of $50,000.

Getting the Most out of Your RESP

In addition to the CESG, you can also use your RESP to take advantage of other government-sponsored education grants. These include federal initiatives such as the Canada Learning Bond (CLB).

Another creative way take advantage of your RESP is to invest the money you receive through the Universal Child Care Benefit (UCCB) into your child’s RESP to help your free government money grow into a secure future for your child.

RESPs come in a variety of forms, including individual plans, family plans, and group plans. What is the RESP that will be best for your child’s future? Talk to one of our financial planners to find the RESP right for you.

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Last updated Feb 11, 2019