Registered Education Savings Plan (RESP)

Registered Education Savings Plan (RESP)

The Canadian RESP (Registered Education Savings Plan) is a savings plan that is registered by the Government of Canada to allow savings for a child's education to grow tax-free until the child is ready for his/her post-secondary education. They're also eligible for extra money through the government's Canada Education Savings Grant and, if you qualify for the program, the Canada Learning Bond. A RESP is an ideal financial vehicle to meet the job market’s education requirements and help you defray mounting education costs.

Individual RESP - An individual RESP can be opened by anyone, and anyone can contribute to it. 'Anyone' includes parents, grandparents, aunts and uncles, even friends. You can even contribute to a plan for yourself. Contributions can be made for up to 31 years, and the plan must be collapsed within 35 years of the end of the year it starts.

Family RESP - Family RESP’s can have one or more beneficiaries. Please note that each beneficiary must be under 21 when named, and be connected by blood or adoption to each living contributor. This means that a child, grandchild, brother or sister qualify, but not a nephew, niece, spouse or an actual subscriber.

A Few Things You Should Know:

• You are eligible for a government grant of up to $7,200, or 20% of your annual contributions to the plan (up to a maximum of $500 per year).
• The beneficiary obtains an income tax deferral on his or her investment income.
• You may change the plan beneficiary.
• Your protection against financial market fluctuations may attain and even exceed 100% of the capital invested.