Registered Education Savings Plan (RESP)

A Registered Education Savings Plan (RESP) is a Savings plan introduced by the govt that helps you save for your child’s post-secondary education. The money that you invested in a RESP grows on tax-deferred basis. The government also contributes to your savings till child reached age 17.

Once child enrolls for his/her post-secondary education, He / She can withdraw the funds for education purposes. Withdrawal is a taxable event. Out of the withdrawal amount, one must pay tax on the growth of total investment and the grants which govt gave during this period. Since students typically fall into the lowest tax brackets, there is no to minimal tax for students upon withdrawal.

Various roles in RESP program:
• Subscriber: the person who enters and makes the contributions to an RESP. Often subscribers are parents, grandparents, even another family member or family friend can contribute.
• Beneficiary: The child named on the plan will be the beneficiary.

Grant types:
Govt contribution into this account is called grants. There are a few types of grants could go to this account, depending on your family income.

Canada Education Savings Grants(CESG):
• Money the govt contributes to a RESP account to help families save more.

It is 20% of every dollar family contributes into this account – up to maximum $500 per calendar year. Maximum amount government allows is up to $7200.
Additional (CESG)grants
• For low to middle income families, govt adds another 10% into this grant( amount is calculated based on income brackets .
Canada Learning Bond (CLB):
• For low-income families received another contribution e.g. $500 payable at account opening, followed by $100 per year until the beneficiary turns age 15. Total amount in this grant (CLB) is $2000

How a family can ensure that they can accumulate more for their kids, Please contact us! We’ll make sure that you start your RESP with a financial institution:

• Which gives additional bonus.
• Charges less management fee.
• Deductions at the time of withdrawals are less than other financial institutions.