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What is a Registered Education Savings Plan (RESP)?
A Registered Education Savings Plan (RESP) is a savings program that helps you save for your child’s post-secondary education.
You may be eligible for financial assistance from the government through the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB) programs if you have an RESP for your child. The amount you will receive depends on your income. Interest from investment income in an RESP is not taxed.
You can open an RESP for your child or another family member who is under 21. The maximum amount for an RESP is $50,000. After high school, if your child is enrolled in an eligible college or university program, they will receive this money to cover some or all of their education costs.
RESPs are offered through banks, credit unions and other financial institutions. RESPs have different restrictions and structures, so it is a good idea to look at different options and to ask questions before you open one.
When looking for an RESP, you may want to ask:
- What fees do I have to pay?
- How will payments be made from the plan once my child is at college or university?
- What types of post-secondary programs are eligible?
- What happens if my child does not go to college or university?
- How can I get my money out of the plan if I decide to cancel?
- Can I transfer the money in my RESP to another child or to another financial institution?
In addition to money that you invest for your child’s education, you may be eligible for money from the Government of Canada.
Canada Education Savings Grant
If you contribute to your child’s RESP, you may be eligible for up to a maximum of $7,200 through the Canada Education Savings Grant. The amount the government will contribute each year depends on your income and how much you contribute to the RESP. If your child was born after 2007, government contributions are based on your contribution room of $500 a year. If you do not use that amount one year, you can use it the next year.
Canada Learning Bond
If your child was born in 2004 or later and you receive the National Child Benefit Supplement, you may be eligible for the Canada Learning Bond. If you have an RESP open and you qualify for this program you will receive $500 for each child and another $100 a year until your child turns 18. The maximum amount is $2,000.
You do not need to contribute to an RESP to receive this money; however, you do need to have an RESP account for each child.
For More Information
- Education Savings and RESPs - Information about RESPs and government subsidies. From the Government of Canada.
- Saving for Your Child’s Education - Information about different RESPs and how to make an informed decision before you invest. From the Ontario Securities Commission.
- Canada Learning Bond Brochure - Multilingual brochures that outline basic information about the Canada Learning Bond (CLB). From Human Resources and Skills Development Canada.
- Registered Education Savings Plans (RESPs) - Plain language information about what to consider when opening, investing in or withdrawing money from an RESP. From the Ontario Securities Comission.
- Introduction to Investing - A multilingual website with basic information about investing in Canada and avoiding investment scams. From the Ontario Securities Commission.
November 15, 2016