Registered Education Savings Plan

An RESP (Registered Education Savings Plan) is a tax-advantaged savings account designed to help parents, guardians, and family members save for a child's post-secondary education. The government also contributes to the account through grants and bonds.

Anyone can open an RESP, including parents, grandparents, other relatives, or friends. The person who opens the RESP is known as the subscriber, and the child for whom the savings are intended is the beneficiary.

There is no annual contribution limit, but there is a lifetime contribution limit of $50,000 per beneficiary. Contributions above this limit may incur penalties.

The Canada Education Savings Grant (CESG) provides 20% on the first $2,500 contributed annually, up to a maximum of $500 per year. The Canada Learning Bond (CLB) is available for children from low-income families, offering up to $2,000 without requiring annual contributions.

No, RESP contributions are not tax-deductible. However, the investment income earned within the RESP grows tax-free until it's withdrawn.

If the beneficiary doesn’t pursue post-secondary education, you have several options: transfer the RESP to another beneficiary, keep the RESP open (it can remain open for up to 36 years), or withdraw the contributions (subject to certain conditions).

Withdrawals from an RESP are split into contributions and earnings. Contributions can be withdrawn tax-free. The earnings and grants, known as Educational Assistance Payments (EAPs), are taxed in the hands of the student, who usually has a lower tax rate.

Yes, a child can have multiple RESPs, but the total combined contributions to all plans must not exceed the lifetime limit of $50,000 per beneficiary.

An RESP can remain open for up to 36 years, allowing flexibility if the beneficiary delays their education or takes a gap year.

If contributions exceed the lifetime limit of $50,000 per beneficiary, a 1% per month penalty tax applies to the excess contribution until it is withdrawn.