A Registered Education Savings Plan (RESP) is a special savings account that allows money deposited for a child's post-secondary education to grow tax-free until the person named enrolls in studies after high school.
Having an RESP helps families save for their children's post-secondary education and also encourages them to plan early for school.
Even a small amount of savings in an RESP increases the likelihood that a child will continue their studies after high school.
RESPs can be used to pay for full-time or part-time studies in a college or university, trade school, CEGEP or an apprenticeship program.
The Government of Canada helps savings in RESPs grow more quickly by offering special savings incentives, such as the Canada Education Savings Grant and the Canada Learning Bond.
RESP contributions up to $2,500 per year are eligible for a 20 per cent Canada Education Savings Grant, up to a lifetime maximum grant of $7,200 per child. An additional grant is available for low and middle-income families; a separate application needs to be filled to receive it.
Children from low-income families eligible for the National Child Benefit Supplement could receive an initial Canada Learning Bond of $500 in their RESP, with additional payments of $100 each year until age 15.
RESPs are available from banks, credit unions, group plan dealers or through certified financial planners.
It is important to shop around to find the type of and costs that best suit a family's needs. There are three types of RESPs to choose from: family, individual or group plans.
Parents, guardians, grandparents, other relatives or friends can open an RESP for a child.
