Registered Education Savings Plan (RESPs)

What is a RESP?

A Registered Education Savings Plan (RESP) is a great investment plan that allows you to save for a child's future educational expenses. RESP savings can be used to pay for tuition, books and living expenses.

Depending on your relationship to the beneficiary, there are two types of RESPs you can set up:

• Individual RESP - One person is the beneficiary and they do not have to be related to the subscriber.
• Family RESP - There can be more than one beneficiary as long as they are all related to the subscriber by blood relationship. A blood relationship includes: son, daughter, brother, sister, grandchild or adoption.

Unlike RRSPs, contributions made to an RESP are not tax deductible. However, the contributions grow tax-free in the account.

What are the benefits?
RESP rules along with the Canada Education Savings Grant program (CESG) make RESPs very attractive and flexible. The government will match 20% of what the subscriber contributes each year to the beneficiary, up to a maximum of $400 per year ($800 if there is CESG carry forward).

Investing in an RESP is an excellent way to ensure that your family will be able to achieve their educational goals. You can grow your education funds by starting early and making affordable, convenient monthly contributions up to an annual limit of $4,000 per beneficiary. The government's Canada Education Savings Grant (CESG), contributes 20% annually on the first $2,000 contributed to an RESP making this program extremely attractive.

Canada Education Savings Grant (CESG)
How does it work?

How frequently do you receive money from the government? Not often, so, take advantage of it!

The Federal Government introduced the Canada Education Savings Grant (CESG) program to encourage parents to save using RESPs. Under this program, the government pays 20% on the first $2,000 in annual RESP contributions. That's an automatic $400 bonus per year for each beneficiary up to age 18, to a lifetime limit of $7,200. Unused grant room can be carried forward indefinitely.

If you did not open an RESP last year, you can still contribute up to $4,000 this year and receive up to $800 from the CESG program.
The sooner you start contributing, the more grant money you collect, and the more time this money has to grow.

Remember, the best way to give your children or grandchildren a head start is with a Registered Education Savings Plan (RESP). Your RESP will help you build a brighter, more secure future for your children.