Registered Education Savings Plan (RESP)

A Registered Education Savings Plan (RESP) is an investment contract available to parents in Canada to save for their children’s post-secondary education which includes university, college, or other designated educational institution in Canada, a certified course that develops or improve skills in an occupation as approved by Employment and Social Development Canada (ESDC), or a university, college, or other educational institution outside Canada that has courses at the post-secondary school.

Since 2007 there is no annual limit for contributions however there is a lifetime limit per beneficiary of $50,000.  RESP contributions cannot be deducted from your income on your income tax and benefit return.  Since the intended beneficiary is expected to have low or nil income while attending post secondary education, use of the RESP will have no tax implications.

A beneficiary under a family plan entered into after 1998, must be less than 21 years of age at the time he or she is named as a beneficiary.   When one family plan is transferred to another, a beneficiary who is 21 years of age or older can still be named a beneficiary to the new RESP.

You can designate an individual as a beneficiary under the RESP only if:

• the individual’s social insurance number (SIN) is given to the promoter before the designation is made; and
• the individual is a resident of Canada when the designation is made.

Follow these two easy steps:

• Get a Social Insurance Number (SIN) for your child, and get one for yourself if you do not already have one. There is no fee; however, certain documents, such as birth certificates, are required.
• Choose an RESP provider that best suits your needs. Most financial institutions (such as banks and credit unions), as well as certified financial planners and group plan dealers, provide RESPs.

Anyone—parents, grandparents, other family members and friends—can open an RESP for a child.  RESPs can be opened by one person, or opened jointly by spouses or common-law partners.  They can also be opened by child-care agencies.  While you can open a plan for a child, you can also name yourself or another adult as the beneficiary.

It is very important to choose the right type of RESP.  We can help guide you.

A family plan is ideal if you have more than one child.

You can name one or more children to receive the savings when it is time to pay for their studies after high school.  The children must be related to you, either by blood or adoption.  They may be your children, stepchildren, grandchildren (including adopted grandchildren), brothers or sisters.

This type of plan is ideal if you are not related to the child you are saving for.  In this type of plan, only one beneficiary is named in the RESP, and the beneficiary does not have to be related to you.

A group plan is for one child only, and the child does not have to be related to you.

A group plan is ideal if you can make regular payments throughout the term of the RESP.  In this type of plan, your savings are combined with those of other people.  How much each child gets depends on how much money is in the group account, and on the number of students of the same age who are in school that year.

These plans are provided by group plan dealers who usually invest the money in low-risk investments.