RESP

An RESP stands for Registered Education Savings Plan. It’s a tax-advantaged investment account designed to help parents (or anyone) save for a child’s post-secondary education in Canada.

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Key Features of RESP:

1. Tax-Sheltered Growth
   •    Investments grow tax-free until withdrawal.

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2. Government Grants
   •    Canada Education Savings Grant (CESG):
The government adds 20% on the first $2,500 you contribute per year per child.
That’s up to $500/year, with a lifetime max of $7,200 per child.

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3. Contribution Limit
   •    Lifetime limit: $50,000 per child
   •    No annual limit

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4. Withdrawals
   •    When the child enrolls in post-secondary education, they can start withdrawing funds.
   •    The original contributions are tax-free.
   •    The growth and grants are taxed in the student’s hands, who usually has a low income, so taxes are minimal or none.​

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Types of RESPs:
   •    Individual Plan: For one beneficiary
   •    Family Plan: For multiple children (must be related)
   •    Group Plan: Offered by scholarship providers with pooled investments (more restrictive)​

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Why it matters:

An RESP is one of the smartest ways to fund your child’s future education, thanks to free government money and tax-free growth.