The Registered Education Savings Plan (RESP) for Educational Planning
Facts about an RESP
A Registered Education Savings Plan (RESP) is a savings plan registered with the government that can help you save for your child’s post-secondary education.
Money invested in an RESP grows tax-deferred. The government helps contribute to your savings with education grants.
Later in life, as your child enrols at a qualifying post-secondary institution, you can withdraw the funds for educational purposes. The payments made from these funds are called Educational Assistance Payments (EAPs).
Invested income and government grants received when withdrawn from the RESP are taxable. You do not pay tax on the contributions you made using your own money. Then these amounts are taxed in the tax return of the student – usually with little or no tax payable as students generally will be in the lowest tax bracket.
How do RESPs help my money accumulate?
- Starting to use an RESP for your child early, while they are young, gives you more time for your contributed funds to grow.
- The Canada Education Savings Grant (CESG) will match 20% of annual contributions, up to $500 per year
- These contributions can continue until you reach the lifetime limit of $7,200 per child
- Investing your Canada Child Benefit can assist you while saving enough to qualify for the maximum CESG amount
Federal Government-funded education grants
The Government of Canada supports saving for a child’s education by offering grants to a child’s RESP – offering you additional funds to accumulate educational savings.
The Canada Education Savings Grant (CESG)
The basic Canada Education Savings Grant (CESG) increases your year by year contribution by 20%, up to $500 per beneficiary each year to a lifetime limit of $7,200 per beneficiary. Additional CESG grants may be available, depending on your income.
Please talk to us for more information about the RESP and the CESG grant as it applies to your province.
Source: CRA
PUBLISHER’S COPYRIGHT & LEGAL USE DISCLAIMER
All articles are a legal copyright of Adviceon®Media.
The particulars contained herein were obtained from sources which we believe are reliable, but are not guaranteed by us and may be incomplete. This website is not deemed to be used as a solicitation in a jurisdiction where this representative is not registered. This content is not intended to provide specific personalized advice, including, without limitation, investment, insurance, financial, legal, accounting or tax advice; and any reference to facts and data provided are from various sources believed to be reliable, but we cannot guarantee they are complete or accurate; and it is intended primarily for Canadian residents only, and the information contained herein is subject to change without notice. References in this Web site to third party goods or services should not be regarded as an endorsement, offer or solicitation of these or any goods or services. Always consult an appropriate professional regarding your particular circumstances before making any financial decision.
MUTUAL FUNDS AND/OR SEGREGATED FUNDS DISCLAIMER
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investment funds, including segregated fund investments. Please read the fund summary information folder prospectus before investing. Mutual Funds and/or Segregated Funds may not be guaranteed, their market value changes daily and past performance is not indicative of future results. The publisher does not guarantee the accuracy and will not be held liable in any way for any error, or omission, or any financial decision. Talk to your advisor before making any financial decision. A description of the key features of the applicable individual variable annuity contract or segregated fund is contained in the Information Folder. Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. Product features are subject to change.