Registered Education Savings Plan RESP
RESPs can be a great way to save for a child’s post-secondary education. The money invested in an RESP can grow tax-deferred until the time of withdrawal, and the best part is that the government can contribute up to $7,200 directly to a child’s RESP.
Benefits of an RESP
Tax-deferred growth potential
RESP earnings are tax-deferred. When withdrawn, the earnings are taxed as income to the child, who may pay little to no taxes as a student.
For tuition and beyond
RESPs can be used for items related to obtaining a post-secondary education, including tuition, textbooks, rent and transportation.
Friends and family can contribute
Friends and family can open an RESP to help you save for your child's education.
How RESPs work
- You contribute money into a child’s RESP. The government will then contribute an additional 20% on the first $2,500 contributed annually, up to a maximum of $500 a year. That can add up to $7,200 over the lifetime of the RESP, per child, in grant money through the Canada Education Savings Grant (CESG). You may also be eligible for the Canada Learning Bond (CLB) and additional provincial grants.
- You can set up an individual or family RESP. An individual plan is meant for one child, whereas savings in a family plan are shared among multiple children.
- There are no annual contribution limits or any limits on the number of RESPs you can have. Keep in mind that the lifetime contribution limit is $50,000 per child and you could make RESP contributions for up to 31 years.
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