What is RESP?
Updated: Nov 4, 2022
A registered Saving Plan (RESP) is a registered plan to encourage people to save for higher education. Savings in the RESP account grow tax-differed and are supplemented by contributions from the federal government for children aged 17 and younger. RESP can be opened for your child, your niece, your grandchild, or any loved one. Then, when the child is ready to pursue post-secondary education, they won't have to worry about their affordability.
The first thing needed to open an RESP account is getting your child set up with a Social Security Number. Then you need to choose an RESP provider. There are three types of RESPs:
It is important to remember that RESPs give you access to the grant that government provides to finance your child's education. Through the Canada Education Saving Grant (CESG), the
The Canadian government will match 20% on each dollar you put into an RESP, but it has an annual limit of $500 and a lifetime maximum of $7,200 per child. You might also be eligible for the Canada Learning Bond, which is available to eligible lower-income families based on your household's income. These families will earn $500 simply for starting RESP, and they may receive an additional $100 for each year they qualify, up to a maximum of $2,000 per child.
The RESP remains open for up to 36 years, so you can take your time deciding once High School ends. Then, once the child enrolls for post-secondary, you can start withdrawing money from RESP to help them with important things like tuition fees, books, food, or other expenses.
If the child disagrees with continuing with post-secondary, you can transfer the funds to another child, or RESP can be closed.