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RESP FAQs
A Registered Education Savings Plan (RESP) allows you to save for your child's future education needs. It is a tax sheltered investment that allows your investment to grow. The biggest RESP benefit it that the government will kick in 20% of your contributions, up to an annual limit of $2,500 and a lifetime limit of $7,200. This program is called the Canada Education Savings Grant (CESG) and is available to all income levels. Lower and middle income families may be eligible for additional grants such as the Canada Learning Bond.
Things to know:
- Contributions are not tax deductible
- You can contribute up to $50,000 per child (beneficiary)
- Funds are withdrawn in the beneficiary's name and become part of their taxable income for that year.
Anyone can invest funds in an RESP for a child. Typically it is a parent, grandparent or guardian. There is certain information you need to provide for the child to open the RESP.
Investing in an RESP helps to ensure that when your child or the beneficiary is ready to attend post-secondary, there are funds available to assist with the cost. Education can be a huge expense so starting early is always a great idea.
There is no annual limit to how much you can contribute to an RESP, but there is a lifetime limit of $50,000 per child. If you did not maximize your contribution in previous years, you can catch up at $2,500 per year in addition to your $2,500 contribution in the current year.
Multi-children families can open an RESP Family Plan. The same benefits and contribution limits apply and there are efficiencies in holding one plan, rather than multiple individual ones.
For in-depth RESP planning, contact our Financial Services Advisors.