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1. What is an RESP?
A Registered Educations Savings Plan (RESP) is a type of savings account that helps you save for your child’s post-secondary education.
The plan encourages Canadians to save for post-secondary education, by providing tax benefits and government grants. Such grants include: the Canada Education Savings Grant, Canada Learning Bond, and other grants offered by provincial education savings program.
2. How does an RESP work?
There are three parties involved with an RESP: a subscriber, a promoter, and a beneficiary. The subscriber is the person who makes contributions to the RESP (ex: the parent), the promoter is the institution that offers the RESPs and manages the account, and the beneficiary is the person who will ultimately receive the money from the RESP (ex: your child).
Once you’ve opened an RESP – your savings grow tax free (as long as you keep your money in the plan of course). If you’re saving for a child that’s under the age of 17, the federal government will contribute money into your RESP as a grant. Provincial grants are also available and vary by province.
3. Questions for RESP Providers
It’s a good idea to ask these questions before choosing a Registered Education Savings Plan (RESP) Provider.
- Once I have opened an RESP, will I have to pay any fees? If so, what are they for and how much will I have to pay?
- Do I have to put a minimum amount of money into an RESP?
- Do I have to make regular payments?
- What happens if I can’t make regular payments?
- What are my investment choices? What are the benefits of each choice? Can the value of my investment go down?
- Can I withdraw money if I need it? Are there any fees or penalties for withdrawing money early?
- Can I transfer the RESP to another person, or to another RESP provider? What is the cost to transfer?
- What will happen to my savings in the RESP if my child does not continue his or her education after high school?
- Does the RESP provider limit the types of qualified educational programs that I can use my RESP for?
- What happens if I close my RESP early?
- What if my child decides to go to school part-time?
- Does the RESP provider offer all education savings incentives, including the additional Canada Education Savings Grant and Canada Learning Bond?
For more information, please visit Employment and Social Development Canada Website. For a list of RESP promoters, please click here.
