RESP
Smart Savings for Bright Futures, Open an RESP Today!
A Registered Education Savings Plan (RESP) is a Canadian account designed to help families save for a child’s post-secondary education, with valuable government support.
Key Benefits:
- Government Grants: The Canada Education Savings Grant (CESG) matches 20% of your annual contributions up to $500 per year, with a lifetime maximum of $7,200 per child. Lower-income families may also receive the Canada Learning Bond (CLB), up to $2,000.
- Tax-Deferred Growth: Investment earnings inside a RESP grow tax-free. Withdrawals for education are taxed in the student’s hands, usually resulting in little or no tax.
- Flexible Contributions: Any adult can open and contribute to a RESP for a child, with a lifetime contribution limit of $50,000 per beneficiary.
- Eligible Expenses: RESP funds can be used for tuition, rent, books, tools, and transportation for recognized programs.
- Long-Term Flexibility: You can contribute for up to 31 years, and the plan can stay open for 35 years.
RESPs help you save for a child’s education, boost savings with government grants, and offer tax advantages, making them a smart tool for reaching education-related financial milestones.
Frequently asked questions (FAQ)
No, there is no annual contribution limit for RESPs, but to maximize the Canada Education Savings Grant (CESG), it’s recommended to contribute $2,500 per beneficiary each year.
The lifetime contribution limit is $50,000 per beneficiary across all RESPs opened for that child.
Any amount over $50,000 is subject to a 1% per month penalty tax until withdrawn, and excess contributions do not qualify for additional government grants.
Yes, you can catch up by contributing up to $5,000 in a year, which lets you receive the current year’s CESG and one previous year’s grant. However, you can only catch up on one year at a time, so it may take several years to fully maximize missed grants if you started late.
Yes, multiple RESPs can be opened by different people (such as parents and grandparents) for the same beneficiary, but the $50,000 lifetime limit applies to all accounts combined.
You can contribute to an RESP for up to 31 years, and the plan can stay open for a maximum of 35 years, giving ample time to save and use the funds for education.
