Registered education savings plan (RESP)

 A post-secondary student on graduation day

What is an RESP?

An RESP is probably the best way to save for a child's or grandchild's post-secondary education.

Why invest in an RESP today?

  • government grants
  • tax deferral, and
  • the advantages of saving early for a child's future.

Here are a few facts:

  • Parents, grandparents and friends can contribute money to an RESP – to a lifetime total of $50,000 per child.
  • RESP contributions are not tax deductible. However, any investment income you earn within the plan is not taxed until it's withdrawn.
  • The federal government adds a Canada Education Savings Grant (CESG) of 20% of what you put in, up to $500 per year to a lifetime maximum of $7,200 for each child. Contributors with a lower family income receive a higher grant. For details on additional grants you can receive, visit CESG.

Types of RESPs available

Family RESP plans

  • You can name one or more children as beneficiaries, but they must be related to you.
  • Beneficiaries must be siblings of one another to receive the CESG and some provincial grants (i.e., Alberta Centennial Education Savings Plan in the province of Alberta).
  • Children, grandchildren, adopted children and stepchildren are fully eligible.
  • If the older children don't go to school, you can transfer the grant money, under certain circumstances, to other beneficiaries.
  • You don't have to split payments evenly between children.

Individual RESP plans

  • These plans can be opened by anyone -- the planholder doesn't have to be a close relative.
  • There are no age limits, so you can set up an RESP for yourself or another adult.

In both types of Registered Education Savings Plans the planholder fully controls:

  • how the money is invested, and
  • the timing, amount and frequency of payments to the beneficiary.

For more information, please visit Canada Revenue Agency’s RESP page.

Now’s the time for professional help

With all the options that are available, professional guidance can be a valuable part of your planning process. Speak to an advisor today to learn how a RESP fits into Money for Life, Sun Life Financial's customized approach to your financial and retirement planning.