What is an RESP?
A Registered Education Savings Plan (RESP) is an account designed to help parents and guardians save for their child’s post-secondary education. It’s important to note that RESPs are not tax deductible, but they do offer many other tax advantages such as tax-free growth and access to government grants.
An RESP is primarily used to save and invest money for the purpose of funding a beneficiary’s post-secondary education assisting with things such as tuition fees, textbooks, supplies, accommodations and student loans. A beneficiary is the person (usually child) who will get the money from the RESP to pay for their education after high school.
Why choose an RESP?
Government grants and bonds
The government incentivizes saving for education.
The Government of Canada provides incentives to save for education through programs like the Canada Education Savings Grant and the Canada Learning Bond.
Tax advantages for the win
Your contributions grow tax-free.
Your contributions grow tax-free, meaning you don't get charged taxes on any investment earnings.
Flexible investment options
Stocks, bonds and mutual funds — your choice.
You have a range of investment options including stocks, bonds, and mutual funds to make the most of your RESP.
Types of RESP plans.
Family plan
For families with more than one child.
Family plans are for those who plan on having more than one child and allows you to name one or more children to receive the savings.
Individual (non-family) plan
For one child, related or not.
This plan is for those who have one child. You do not have to be related to the child you'll be saving for.
Group plan
Contributions pooled with other participants.
A pooled education savings plan where contributions from many families are combined and managed together. Education payments are made according to the terms of the plan.
Is this right you?
Right for you if:
- Post-secondary is in the future. If you have a child or beneficiary who plans to go receive post-secondary education in the future. Big dreams require some pre-planning!
- You want to take advantage of free government money. The Canadian government provides grants which can significantly boost your savings when you contribute to a RESP.
- Flexibility is key. If your beneficiary decides not to pursue post-secondary education or needs less than expected, you have options to transfer funds or withdraw contributions.
May not be right for you if you:
- You don't have a child or beneficiary in mind who's trying to pursue post-secondary education.
- You have short-term goals. If you want a short-term investment with more liquidity (being able to quickly convert your investment to cash).
- High risk, high return is your strategy. If you’re ready to go big or go home, a RESP is not for you. You might want to consider stocks as part of your investment strategy.
Tools to help you reach your goals.
Common questions.
Here’s what people ask us the most.
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An RESP can help you build savings for your child’s future education while taking advantage of government incentives. It can be used to help cover eligible education costs, including tuition, books, supplies and other expenses related to post-secondary studies.
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You can contribute up to a lifetime maximum of $50,000 per beneficiary. There is no annual contribution limit, but government grant programs may have their own annual limits.
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Eligible RESP beneficiaries may receive government incentives, such as the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB), which can help grow education savings faster.
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When the beneficiary enrolls in an eligible post-secondary program, RESP funds can be used to help pay for education-related expenses. This may include tuition, books, supplies, accommodation and other costs related to their studies.
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If your child does not attend post-secondary education, there may be options available, such as transferring funds to another eligible beneficiary or transferring certain amounts to your RRSP if you meet the requirements. Government grants may need to be returned. A Financial Advisor can help you understand your options.
We're here to help.
Not sure which investment option is right for you? Our advisors can help you understand your choices, explore different options and create a plan that fits your goals and financial situation.
