RESP - Registered Education Savings Plan

Registered Education Savings Plan (RESP)

The Registered Education Savings Plan (RESP) is a registered plan designed to help families save for a child’s post-secondary education through tax-deferred growth and access to valuable government incentives, such as the Canada Education Savings Grant (CESG). While contributions are not tax-deductible, all investment income grows tax-sheltered until withdrawal, and when funds are used for education, the income and grant portions are taxed in the student’s hands, who typically has a low or zero tax rate. RESPs can hold a wide range of investments, including segregated funds, and may be set up as individual or family plans, offering flexibility for multiple beneficiaries. This makes the RESP an effective long-term planning tool for parents and grandparents who want to reduce the future cost of education while benefiting from government support and tax efficiency.

Key Features

• Contributions are not tax-deductible

• Investment income grows tax-deferred

• Eligible for Canada Education Savings Grant (CESG)

• Educational Assistance Payments (EAPs) are taxed in the student’s hands

Plus Points

• Access to government grants

• Typically low or no tax on withdrawals

Objective

The objective of an RESP is to help individuals save for a beneficiary’s post-secondary education using tax-deferred growth and government incentives.

Who Can Open

• Parents, grandparents, or guardians

• Beneficiary must have a valid SIN

Best For

• Parents and grandparents planning for education costs