Registered education savings plans (RESPs)
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 However, any investment income you earn within the plan is not taxed until it's withdrawn.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 RESP .