Registered Education Savings Plans (RESPs)

The cost of tuition is on the rise… again. Patterns of cut backs and increased costs are expected to be on-going. While the government struggles to provide funding for post-secondary education, they have found a way to help Canadians save for their child’s education.

Annual contributions up to $2,500 into a Registered Education Savings Plan (RESP) will generate a 20% grant from the federal government through the Canadian Education Savings Grant Program (CESG). Based on the family income, you may also qualify for an additional 20% grant. Similar to RRSP's, the earnings on contributions, including the grant amount, will accumulate tax-free until they are withdrawn.

Anyone can contribute to an RESP. Immediate family, grandparents, uncles and aunts, and even friends of the beneficiary. If the child does not attend a post-secondary school, a new beneficiary may be named. If a new beneficiary is not appointed, the unused contributions are returned, excluding the CESG amounts. Unused amounts up to $50,000 may also be transferred to an RRSP, where there is sufficient contribution room available.