Registered Education Saving Plan (RESP)
An RESP is a special savings plan (like a savings account) that helps you, your family or friends to save early for a child’s education after high school is registered by the Government of Canada that allows savings for education after high school to grow tax-free and could also gain government money through the Canada Education Savings Grant and the Canada Learning Bond, if you qualify. As education costs continue to rise, an RESP can help maximize your savings for your child.
A Registered Education Savings Plan (RESP) is one of the easiest and best ways to fund the future ambitions of your child.
Who can open and contribute to an RESP?
Anyone can open an Individual RESP Plan and anyone can contribute to it. This includes parents, grandparents, aunts, uncles, and friends.
For Family RESP Plans, the contributor must be related by blood or adoption to the beneficiaries
It can be transferred from one institution to another subject to the terms and conditions of the individual investments held in the plan.
Any principal contributed to the RESP can be withdrawn at any time by its contributor. In this case, any eligible CESG payments on those contributions must be repaid to the Government. If the beneficiary has also received additional CESG, none of the beneficiaries in the plan will be eligible for additional CESG for the next 2 years.
If the student elects to not attend a post-secondary institution, any accumulated interest may be withdrawn by the contributor; this is called an AIP (Accumulated Income payment). To receive this AIP, the plan must be in place for at least 10 years and all beneficiaries must be over 21 years old. This AIP is taxed as income unless it is rolled into a registered retirement savings plan (RRSP), subject to individual contribution limits and applicable rules.