Registered Education Savings Plans (RESPs)

Saving for your child’s future is a daunting task. However, with the help of a Registered Education savings plans (RESPs), you can start investing early, making it easier to tackle college and university expenses.

What are Registered Education Savings Plans (RESPs)?

An RESP is an investment option sponsored by the Canadian government that helps individuals save for their child’s, grandchild’s, niece’s, nephew’s and similar beneficiary’s post-secondary education.

Plan subscribers—those that open an RESP and make contributions into it—designate a beneficiary who can then use the funds to cover expenses related to apprenticeships, trade schools, colleges and universities.

Subscribers can enroll in RESPs simply by opening an account with a bank, credit union or other financial institution. The first $2,500 you contribute each year gets a 20 per cent matching contribution from the federal government using what’s called a Canada Education Savings Grant (CESG). Under CESGs, beneficiaries are entitled to $7,200 of government contributions.

Benefits of RESPs

• RESPs are flexible, and anyone can open an account for a beneficiary. There are two basic types of RESPs—family and individual plans. The major difference between the two is that, with family plans, subscribers can name more than one beneficiary and funds do not need to be shared equally.
• Subscribers can contribute any amount to an RESP. However, there is typically a lifetime contribution limit of $50,000 per beneficiary. There are no limits on the number of plans subscribers can establish or RESPs a beneficiary may have.
• RESPs allow subscribers to get an early start on saving for their beneficiary’s education expenses. In fact, RESPs can be opened as soon as the beneficiary has a social insurance number.
• Subscribers don’t pay taxes on contributions until the money is taken out. Account holders can make lump-sum contributions at any time or set up automatic payments.
• Qualifying investments include savings deposits, guaranteed investment certificates and mutual funds.

Don’t wait to start saving for a loved one’s future. Contact us today to learn more about RESPs and if they are the right fit for the children in your life.