An RESP is a powerful way to save for your child’s or grandchild’s post-secondary education. Parents, grandparents and friends can contribute money any time to an RESP – up to a lifetime total of $50,000 per child. These contributions are not tax deductible, but any investment income that’s earned within the plan isn’t taxed until it’s withdrawn.
In addition to tax-deferred growth, the federal government will also contribute a Canada Education Savings Grant (CESG) of 20% of what you put in, up to $500 per year – to a lifetime maximum of $7,200 for each child. If your family income is low, you can receive an even higher amount. For details on these and other grants you may be eligible for, visit CESG.
You should consider an RESP if:
- You want to make sure that an important child in your life has the opportunity to get a post-secondary education
- You want your child/children/grandchildren to have the benefits of the Canada Education Savings Grant program
- You think it’s a good idea to set up a tax-efficient account where relatives or family friends can recognize a child’s special occasions (birthdays, etc.) by contributing directly to his/her post-secondary education