What is an RESP?

A Registered Education Savings Plan (RESP) is a tax-deferred savings account designed to help parents save for their child's post-secondary education.

- Contributions are not tax-deductible, but investment growth and government grants are taxable in the student’s hands, typically at a lower rate.

Contribution Limits

• Lifetime maximum per beneficiary: $50,000
• No annual deposit limit—flexible contributions
• $2,500/year maximizes grant eligibility
• Contributions allowed for 31 years, plan can remain open for 35 years

Government Grants & Bonds

1. Canada Education Savings Grant (CESG)

• 20% match on the first $2,500 contributed annually (up to $500/year)
• Extra 10–20% on the first $500/year for low- to middle-income families
• Lifetime maximum: $7,200 per child
• Carry-forward option lets you catch up on unused grant room

2. Canada Learning Bond (CLB)

• For low-income families
• $500 initial grant when RESP is opened
• $100/year until the child turns 15 (up to $2,000 lifetime)
• No contribution required to receive CLB

RESP Withdrawals

A. Educational Assistance Payments (EAP)

• For students enrolled in post-secondary education
• Full-time: Up to $8,000 in first 13 weeks, unlimited thereafter
• Part-time: Up to $4,000 in first 13 weeks
• EAPs (grants + growth) are taxable to the student

B. Contributions

• Can be withdrawn anytime, tax-free
• These were made with after-tax income

C. Accumulated Income Payments (AIP)

• If beneficiary doesn't pursue post-secondary education
• Growth can be withdrawn as AIP:
• Taxed as income + 20% penalty (12% in Quebec)
• Up to $50,000 can be rolled into an RRSP (if contribution room exists)

Want to learn more?

Contact a Licensed Life Insurance Advisor today to open an RESP and start planning your child’s educational future!