Registered Education Savings Plan (RESP)

An RESP is an account to help save for a child's education. Your money inside the RESP can be used to purchase a variety of investments including, mutual funds, segregated funds, stocks, bonds, guaranteed investment certificates (GIC) and others. These investments within your RESP are all tax-sheltered, meaning you do not pay any interest on the dividends, or capital gains. 

RESP's are opened in the name of the child who will use the money from the account. These can either be an individual RESP for one child or family RESP for multiple children in a family. The lifetime maximum contribution amount is $50,000 per child. The money at the time of withdrawal can be used for educational purposes, as long as the child is enrolled in a qualifying post-secondary educational program.

The Canadian Education Savings Grant (CESG) will match 20% of the contributions to the RESP, at a maximum of $500 per year and $7,200 lifetime per child. At the time of withdrawal, the child who is withdrawing the money will pay taxes on the interest, dividends, capital gains and the government grants. Any contributions to the RESP will not be taxed, as that is after-tax income. 

If your child chooses not to attend a post-secondary institution, at the time of closing the RESP all government grants must be paid back, and the interest accumulated must be withdrawn as income and taxes paid on it. Any contributions may be rolled over into the parents RRSP if their contribution room allows. 

Contact us to learn more.