Registered Education Savings Plan (RESP)

What is an RESP?

An RESP helps you save for your child’s or grandchild’s post-secondary education. The investment vehicle is becoming more and more important due to the fact that the cost of University and College continues to increase.

Are there different types of plans?

You can choose from two plan types.

Individual plans - This type of plan is ideal if you are not related to the child you are saving for. It accommodates one beneficiary, and the beneficiary doesn’t have to be related to you.

Family plans - A family plan is ideal if you have more than one child, and allows for more than one beneficiary so you can add siblings. The children must be related to you, either by blood or adoption. They may be your children, stepchildren, grandchildren (including adopted grandchildren), brothers or sisters.

Are there any contribution limits?

The lifetime contribution limit is $50,000 per beneficiary. There are no annual contribution limits. You can make contributions each year for up to 21 years.

The savings advantage

Although contributions are not tax deductible, the money within the plan grows tax-free until the designated beneficiary withdraws it.

The following grant is available:

Canada Education Savings Grant (CESG)

  • Any child up to the end of the calendar year they reach the age of 17 can get the CESG, as long as he or she has a Registered Education Savings Plan (RESP) and is a resident of Canada at the time the contribution is made. Special rules may apply if your child is between the ages of 16 and 17. The maximum lifetime CESG is $7,200 per child.
  • The grant is invested directly into the beneficiary’s RESP and has two parts:
  • Basic Canada Education Savings Grant
    The Basic Canada Education Savings Grant will give you 20% on every dollar of the first $2,500 you save in your child’s RESP each year.
  • Additional Canada Education Savings Grant
    Depending on your net family income, you could receive an extra 10% or 20% on every dollar of the first $500 you save in your child’s RESP each year.

If you have questions regarding the RESP, contact your MDL Advisor.