Registered education savings plan (RESP)
What is an RESP?
An RESP is a great way to save for a child's or grandchild's post-secondary education. Parents, grandparents and friends can contribute money any time to an RESP – up to a lifetime total of $50,000 per child. These contributions are not tax deductible, but any investment income that’s earned within the plan is not taxed until it's withdrawn.
In addition to tax-deferred growth, the federal government will also automatically contribute 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. If your family income is low, you will receive an even higher amount. For details on these and additional grants you may be eligible to receive, visit CESG.
You should consider an RESP if:
- There is a child you want to make sure has the opportunity to take advantage of a post-secondary education
- You want your child/children/grandchildren to get the benefits of the Canada Education Savings Grant program
- You think it’s a good idea to set up a tax-efficient account where relatives or family friends can recognize a child’s special occasions (birthdays, etc.) by contributing directly to his/her post-secondary education
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 (e.g., Alberta Centennial Education Savings Plan in the province of Alberta).
- Children, grandchildren, adopted children and stepchildren are fully eligible.
- If the older child doesn't go to school, under certain circumstances you can transfer the grant money to other beneficiaries.
- You don't have to split payments evenly among 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 even set up an RESP for yourself or another adult.
In both types of RESP, the planholder fully controls:
- How the money is invested
- The timing, amount and frequency of payments to the beneficiary
For more information, please visit Canada Revenue Agency’s RESP page.