What is an RESP?

• Anyone can open an RESP for a beneficiary who has a Social Insurance Number.
• There is a lifetime contribution limit per beneficiary, and no annual contribution limit.
• The Canada Education Savings Grant matches a percentage of annual contributions up to a maximum.
• Educational Assistance Payments (grants plus growth) are taxable to the student.
• If the child does not pursue eligible studies, grants are repaid and other rules apply to the growth.

Individual plans have one beneficiary. Family plans allow siblings to share, which adds flexibility if one child does not attend post-secondary school. Group scholarship plans have rigid contribution schedules and fee structures that should be read carefully before enrolling.

The Canada Education Savings Grant provides a federal match on contributions, with an additional amount for lower-income families. The Canada Learning Bond is available to eligible families without requiring contributions. Some provinces offer additional incentives. Amounts and eligibility are set by the federal government and can change.

Withdrawals split into contributions returned to the subscriber tax-free, and Educational Assistance Payments consisting of grants and growth that are taxable to the student. Because students usually have low income and tuition credits, tax on those payments is often small.

• Contribution and grant limits are set annually — verify current amounts with the Government of Canada.
• Over-contributions attract a monthly penalty tax.
• If no beneficiary attends eligible studies, accumulated income payments are taxable with an additional tax unless transferred to an RRSP where room permits.

• Registered Education Savings Plans and education savings incentives — Government of Canada
• Canada Education Savings Grant — Employment and Social Development Canada
• Savings and pension plans — RRSP, TFSA, RRIF, RESP — Government of Canada