A Registered Education Savings Plan (RESP) is a tax‑advantaged account that helps families save for a child’s post‑secondary education. Anyone with a valid SIN can open one, and the funds may be used for university, college, trade school, CEGEPs, or apprenticeship programs.
Key Highlights
- Contribution limit: $50,000 lifetime per beneficiary.
- Tax benefits: Savings grow tax‑deferred, and educational withdrawals are taxed in the student’s hands, typically resulting in little to no tax.
- Plan timeline: Contributions allowed for 31 years; the plan must be used within 35 years (extended to 40 in certain disability‑related cases).
- Plan types: Individual, Family, and Group.
Government Incentives
- CESG: 20% match on the first $2,500 contributed annually (up to $500 per year, $7,200 lifetime), with additional amounts for lower‑income families.
- CLB: For eligible lower‑income families; provides up to $2,000 total with no contributions required.
Estate Considerations
Naming a successor subscriber is important – otherwise, the RESP may fall into the estate, risking grant loss and limiting access for the child.
To learn more, download the attached article: RESP 101