Personal Retirement & Savings:
Registered Education Savings Plan (RESP)
A Registered Education Savings Plan assists with the ever-increasing costs of post-secondary education. Since 1998, Canadian university tuition fees have been increasing at an annual average rate of 4%. With a Registered Education Savings Plan, you can start saving money now for your children’s future education.
Why do I need a Registered Education Savings Plan?
Registered Education Savings Plans are different from other savings plans as contributions qualify for Canada Education Savings Grants (CESG), where the government contributes a CESG equal to 20% of your annual Registered Education Savings Plan contributions up to $500 per year per child.
How much can I contribute to a RESP?
While there is no annual limit, the maximum lifetime contribution is $50,000 per child. CESGs are capped at a lifetime maximum grant of $7,200.
What if I am unable to make a contribution this year—will I lose the grant?
If you miss an opportunity to receive a grant due to not making a contribution, you’ll be able to make up the missed opportunity in the future years. This is referred to as unused grant room, which allows a beneficiary to receive a CESG of up to $1,000 in one year.
What happens if my children do not go to college or university?
Registered Education Savings Plan contributions and any growth will be returned to you and the CESGs will be returned to the government.
What about taxes?
Contributions and CESGs grow tax-free. Only the growth and CESG portion of the plan are taxable when the funds are withdrawn for education purposes.