Registered Education Savings Plan
A Registered Education Savings Plan (RESP) is a government-approved plan that allows a subscriber (usually a parent) to accumulate savings on a tax-deferred basis to assist with the expenses of post-secondary education for a named beneficiary (child or grandchild). Family Plans allow subscribers to name more than one beneficiary. A social insurance number (SIN) is required for each beneficiary, before being named a beneficiary.
How RESP's work:
- For every dollar contributed by you, 20 cents of the Canada Education Savings Grant (CESG) is added (subject to annual and lifetime maximums)
- Savings can grow tax-deferred
- When your child begins post-secondary education, the money is withdrawn in your child's name. These amounts will usually be taxed at the lowest marginal tax rate - or not at all!
Fund Your Child's Education for Free
You can combine government grants to potentially build substantial eduation savings. Invest your child's Universal Child Care Benefit (UCCB) of $100 per month. When you set up your direct deposit for the UCCB, set up a monthly contribution of the same $100 to a RESP for your child.
The entire amount will be tax-sheltered. By the time your child is ready for post-secondary school, the amount may be enough to pay for your child's education, without spending a penny of your own.
