Registered Education Savings Plan (RESP)

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Registered Education Savings Plan (RESP)

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Understanding Registered Education Savings Plans

So, what is an RESP? A Canadian Registered Education Savings Plan can be a great way to save for your child's education because:

  1. Your plan earnings are tax-free and

  2. You can access matching grants from the Government.

What is an RESP Account?

Let’s start with the basics. RESP accounts are designed to help families save for a child’s advanced education in the long term. A parent, family member, or any other individual can open one at a credit union or other financial institution. The funds held in an RESP are intended for post-secondary use, i.e. university-level studies. 

By investing in an RESP, you can make it easier for the beneficiary to continue their education and potentially build the foundation for a rewarding career. Whether it’s your own child, your niece or nephew, a family friend, or even yourself, an RESP helps address the costs of higher education.

If you’re looking for more comprehensive information about RESP contributions and accounts, RESP matching, or related topics, check out our in-depth RESP guide.

So far, an RESP sounds like a savings account, but with more restrictions. Why do so many families choose to use RESP accounts? Key benefits of RESPs include:

  • Access to government grants. Contributions to an RESP make the account eligible for a partial match from the Canada Education Savings Grant. Every RESP account will earn an additional 20% in grant money on the first $2,500 paid into the account each year. Individuals and families with lower incomes can earn up to an additional $100 in CESG grant money each year.

  • Even more government assistance. The Canada Learning Bond pays up to $2,000 to qualified beneficiaries with an RESP born after January 1, 2004, based on income level.

  • Can hold qualified investments. Qualified investments, like Guaranteed Investment Certificates, can be placed in an RESP. These investments can generate additional income over time, sometimes more than is possible through just interest paid on cash deposits.

  • Tax advantages. Contributions made to an RESP are taxable, but withdrawals made by students are generally taxed at a low level or not at all. Eligibility for tax (or the lack thereof) is determined by the student’s tax bracket, so some exceptions are possible. 

Explore the benefits of RESPs!

Matching Contributions

Discover RESP Matching Contributions

Through the Canada Education Savings Grant (CESG), the government will match 20% of each dollar you put into an RESP account (up to $2,500/year to a lifetime maximum of $7,200). That's thousands of dollars in free tuition!

Tax Savings

Save Money on Tax

You won't pay any taxes on the interest you earn on your RESP. It's a tax-sheltered investment to help you save more for your child's education.

Redemption

Enjoy Easy Redemption Options

Redeeming RESP funds is as simple as providing proof of enrollment. If your child chooses not to go to college after they graduate, no problem:

  • They have 35 years from the time the plan was opened to use the funds.

  • A sibling going to school can use the funds.

  • You can get your principal contributions back and roll over the interest into your RRSP.

Free Banking

Enjoy Free Banking

There's no charge for investing in an RESP. And you'll always have free access to friendly advisors who can help you reach your education savings goals.

Make Your Child’s Post-Secondary Education Affordable

When you register for an education savings plan in Canada, you'll receive a dedicated account tailored specifically for your needs, along with support from our knowledgeable and experienced team.

Additionally, you'll benefit from competitive RESP interest rates and our Responsible Banking™ philosophy designed to save you fees, earn you money, and give back to your community.

Open an RESP today!

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How to Grow Your RESP Savings Faster

If you want to grow your RESP funds faster, you can use several tools granted by the Canadian government and apply these tips:

1. Save on income taxes

Just like a TFSA or a registered retirement savings plan, RESP accounts are exempt from income taxes.

2. Make regular contributions

Making yearly contributions not only saves you money on tax, but it also leads to government grant assistance.

3. Make a lump sum contribution

Lump sum contributions to registered education savings plans aren’t taxable. Use a tax-free savings account to grow your deposit and have your child only pay taxes on the interest earned and grant funds when withdrawing.

RESP Calculator

Use our savings calculators to pinpoint the potential earnings and number of years necessary to max out on government grants.

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RESP Frequently Asked Questions

RESPs are available to any child who is a Canadian resident with a Social Insurance Number.

No, they’re not. However, money paid out of an RESP is paid and taxed to the student. Because most students make low to no income, they can usually withdraw RESP funds tax-free. 

The lifetime contribution limit is $50,000 per child. The Canada Education Savings Grant (CESG) will only match a lifetime maximum of $7,200 per child.

Your RESP account for your child’s education is eligible for a withdrawal when your child finishes high school and enrols in a qualifying post-secondary educational institution. The funds from your RESP can also be used for other purposes, but in such cases, your earnings would be taxable.

An RESP plan can hold numerous investment types other than just cash deposits. Even if you diversify your investment portfolio for an RESP, the same taxation rules still apply.

Additional Resource

You can also view our consolidated RESP brochure (pdf).

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Rates subject to change without notice.

Calculators on the site are made available to you as tools for independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy. All examples are hypothetical and are for illustrative purposes only. Please contact us directly to seek personalized advice from qualified professionals for all personal finance issues.