Understanding Canada's Registered Education Savings Plan (RESP)
Unlock Your Child's Bright Future! Save for their education with ease and take advantage of government grants and tax-sheltered growth.
What is an RESP?
A Registered Education Savings Plan (RESP) is a special savings account designed to help Canadian families save for their children's post-secondary education.
- Tax-Sheltered Growth: Investments grow tax-free until withdrawn.
- Government Grants: Boost your savings with grants like the Canada Education Savings Grant (CESG).
- Contribution Limits: No annual limit, but $50,000 lifetime limit per child.
Benefits of an RESP
- Government Contributions: CESG matches 20% of annual contributions, up to $500 per year, lifetime max $7,200 per child.
- Additional Grants: Low-income families may qualify for grants like the Canada Learning Bond (CLB).
- Tax Deferral: Earnings on contributions and grants are tax-deferred until withdrawn for education.
- Flexibility: Funds can be used for university, college, or trade school programs.
RESP vs. TFSA and RRSP
| Feature |
RESP |
TFSA |
RRSP |
| Purpose |
Education savings |
Any savings goal |
Retirement savings |
| Tax Benefits |
Tax-sheltered growth, government grants |
Tax-free growth |
Tax-deferred growth |
| Government Grants |
Yes |
No |
No |
Conclusion
An RESP is a powerful way to save for your child’s post-secondary education, with tax-sheltered growth and valuable government grants. A financial advisor can help tailor your RESP strategy to your family’s needs.
