Many parents wonder how much to save for their child’s education. They also wonder how soon they should start. The answer is simple. Save Early, Earn More. Even small savings each year will translate into substantial savings later.

What is an RESP?

A Registered Education Savings Plan (RESP) is a government approved plan for the purpose of providing post-secondary education funding for a beneficiary. Income earned within the plan is not taxed until withdrawn.

What are the benefits of an RESP?

Income earned within the plan is tax-sheltered until withdrawn.

If withdrawn by the beneficiary, he or she will usually have a lower marginal tax rate. An RESP provides long-term planning for a beneficiary to attend a post-secondary institution. Contributions belong to the subscriber and can be withdrawn without consequence once the beneficiary is eligible to receive payments.

Canada Education Savings Grant (CESG)

The Government of Canada pays a 20% grant on the first $2500 annual contributions, up to a lifetime maximum of $7200.

Additional Canada Education Savings Grant depends on your family income, you could receive an extra 10% or 20% on every dollar of the first $500 you save in your child’s RESP each year.

Canada Learning Bond (CLB)

The Canada Learning Bond is money that the Government of Canada deposits directly into a child's Registered Education Savings Plan (RESP) account to help parents get a head start on saving for their child's education after high school.  Certain requirements must be met.

RESP Options

Individual Plans

This type of plan is ideal if you are not related to the child you are saving for. In this type of plan, only one beneficiary is named in the RESP, and the beneficiary does not have to be related to you.

Family Plan

A family plan is ideal if you have more than one child. You can name one or more children to receive the savings when it is time to pay for their studies after high school. The children must be related to you, either by blood or adoption. They may be your children, stepchildren, grandchildren (including adopted grandchildren), brothers or sisters.

Contributing to an RESP

An RESP may receive a contribution for 31 years, following the year the RESP was opened. $50,000 is the lifetime contribution limit. There is no annual contribution limit.