Registered Education Savings Plan (RESP)
What is a RESP?
A Registered Education Savings Plan or RESP is a great way to save for your children or grandchildren’s post-secondary education. Other family members and friends may also contribute at any time to a RESP – up to the lifetime total of $50,000 per child. A RESP is a plan that can hold eligible investments within it, such as Guaranteed Interest Accounts (GIAs) or Segregated Funds.
With the increasing cost of tuition and associated fees for post-secondary education, a RESP is a great tool for long-term planning for your family’s financial well-being. RESPs make it easier to save for your children or grandchildren’s education now for peace of mind in the future.
Additionally, on top of your contributions, the government will provide a grant to increase your contribution by 20% to a maximum of $500 per child, per year, with a lifetime maximum of $7,200 per child. Plus, based on your province of residence or level of income, there may be additional grants for which you could qualify.
There is not a one-size-fits-all method to saving for your child’s education to help them support their future goals, but there are some advantages to a RESP:
- Canada Education Savings Grant (CESG) provides a grant of 20% on the first $2,500 contribution for an annual total of $5001
- Grant room is carried over every year2
- Growth is tax-deferred
1 Conditions and age restrictions apply for CESG; depending on the income of the child’s primary caregiver, they may qualify for additional benefits.
2 Maximum CESG is limited to $1,000 per calendar year per child.