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What is an RESP (Registered Education Savings Plan)?
A Registered Education Savings Plan, also known as an RESP, is a savings plan used by parents to help them save for their children’s post-secondary education in Canada. With the rising costs associated with sending a child to college or university, an RESP can really help because the government provides grants* while the savings grow tax-deferred until withdrawn. When the student withdraws the funds for educational purposes, the withdrawals are taxed in the student’s hands, typically at a lower rate.
The sooner you start, the more you save !
Make the Most of Government Grants and Tax Free Savings with an RESP
A RESP is a tax-sheltered savings account. When you save in a RESP the income earned is taxed, however the benefit is that it will be taxed in the hands of your child as a student (students typically pay little to no income tax). You can receive a top-up to your plan from government grants which is available to parents who contribute to an RESP. The government grants provide: up to $7,200 from the Canada Education Savings Grant, up to $2,000 from the Canada Learning Bond, an extra $800 for residents of Alberta from the Alberta Centennial Education Savings Plan, up to $3,600 for residents of Quebec from the Quebec Education Savings Incentive and up to $4,500 for residents of Saskatchewan in the form of the Saskatchewan Advantage Grant for Education Savings. In August 2015, subscribers residing in BC will have the opportunity to apply for the British Columbia Training and Education Savings Grant, which is to be offered as a one-time grant of $1,200.
Understand the Options When Choosing an Education Savings Plan
Contribute any amount to your RESP* up to a lifetime limit of $50,000 and take advantage of tax benefits designed to maximize growth and minimize tax. Depending on the amount of time before your child begins post-secondary education, you can build an education savings plan for them.
Easy and Efficient RESP Contribution Plans
Find a contribution plan that is right for you. You can contribute small amounts more often which compound and add up over time. Set up pre-authorized payments for added simplicity. Or make your RESP contributions annually so that they fall around other major expenses such as insurance and property taxes. Even better, schedule your annual payment to coincide with your tax refund. Your contribution options include:
Single Lump-Sum Contribution: One-time payment
Five-Year Annual Contribution: Yearly contributions for 5 years
Five-Year Monthly Contribution: Monthly contributions for 5 years
Ten-Year Annual Contribution: Yearly contributions for 10 years
Ten-Year Monthly Contribution: Monthly contributions for 10 years
Your plan reaches maturity on July 31st of the year your child turns 18 years of age.
Information and Forms You Will Need
The links below will provide you with helpful information and forms you need to get started, such as an application for a birth certificate and social insurance number. Other forms include government grant and tax benefits:
Let our referral agents help you start a savings plan for your children today !
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