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The payment a beneficiary receives from the interest earned by an RESP, plus any Canadian Education Savings Grant, provincial grants or Canada Learning Bonds is officially called an educational assistance payment and you will likely see it listed this way on the statement you’ll get from your RESP provider. EAPs are limited to $5,000 during the first consecutive 13 weeks of enrollment; after that you can request any size payment.
Beneficiary: The future student who is being saved for.
Planholder: The person who opens and owns the RESP. Also called the subscriber.
Provider: The financial institution or other company that you set up an RESP with. Also called the promoter.
An RESP can hold a variety of investments, from fixed-income products like guaranteed investment certificates to equity investments like mutual funds and individual stocks and bonds. A financial advisor can help you decide what combination of investments will work best for you.
You can contribute as much as you want per year to an RESP, but no more than $50,000 in total per beneficiary. (Neither government grants nor any investment growth in your RESP count toward the $50,000 limit, so there could be more than $50,000 in your plan by the time your child needs it.
You can contribute to an RESP any time during the year. Government grants are applied by calendar year.
Most often, Canadians open and contribute to RESPs for their own children or grandchildren. Family RESPs (that cover more than one sibling) must be opened by a relative, but individual RESPs can be opened by anyone. And anyone – parents, grandparents, godparents, friends – can contribute to either type of plan.
If you contribute to an RESP you won’t get a tax deduction, but when the student you’re saving for withdraws money from the plan for school, any investment growth in the plan will be taxed as that student’s income rather than yours – which can be a significant tax savings.
If the beneficiary doesn’t use some or all of the money in the RESP, you can transfer up to $50,000 of your own contributions and the investment growth to your RRSP if:
If the beneficiary doesn’t attend post-secondary school or you shut down the plan early, you must repay any Canada Education Savings Grants (CESG) or Canada Learning Bonds that have been credited to the RESP.
You can transfer funds between RESPs if the beneficiary of the plan you’re transferring to is under 21 and is a brother or sister of the beneficiary of the plan you’re transferring from, or if you have a family plan that covers more than one sibling. Special rules apply to any Canadian Education Savings Grants (CESGs) or Canada Learning Bonds that may have been received, so speak to your financial advisor before making any moves.
Regardless of your family income, the federal government will top up your annual contribution by 20%, up to $500 per year and $7,200 in total, per beneficiary. The program is called the Canada Education Savings Grant (CESG). If your family income is low, the plan may be eligible for a bigger grant. Learn more about government grants and incentives with an RESP.
The most you can put in an RESP in total is $50,000 for each beneficiary. (From birth to age 18, that’s an average of about $2,777 per year.) Government grants and investment growth may add to that amount. Will it be enough to cover tuition, books and supplies, room and board, transportation and other expenses? Get an estimate with our RESP calculator.
Contact your RESP provider. You will have to provide proof that the beneficiary is enrolled in a qualifying post-secondary educational program, and you may have to provide receipts for expenses such as books and laptops. Payments from the interest earned by an RESP, plus any Canadian Education Savings Grant, provincial grants or Canada Learning Bonds (the educational assistance payment) are limited to $5,000 during the first consecutive 13 weeks of enrollment; after that you can request any size payment. You can withdraw as much of your own contributions to the plan as you wish at any time.