Registered education savings plans (RESPs)
Saving for your child’s or grandchild’s future becomes increasingly important as the cost of post-secondary education continues to increase.
RESPs offer an effective way to maximize the money available to your children or grandchildren when they enroll in a full-time post-secondary program.
Types of plans
You can choose from two plan types.
Individual plans - accommodate one beneficiary.
Family plans - allow for more than one beneficiary so you can add siblings.
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) – Each beneficiary is eligible for the CESG.
- The federal government provides a 20, 30 or 40 per cent grant (dependent on family net income) on the first $500 contributed, and a 20 per cent grant on the next $2,000 contributed annually, to a lifetime maximum of $7,200.
- The grant is invested directly into the beneficiary’s RESP.
In addition to the CESG, you may also apply for one or more of the grants introduced in 2006.
- Canada Learning Bond (for low-income families)
- Alberta Centennial Education Savings grant (for Alberta residents only)
Additional information about RESPs and the grants available can be found on Human Resources and Social Development Canada’s website http://www.servicecanada.gc.ca/eng/goc/resp.shtml.