A Registered Education Savings Plan (RESP) is a special savings plan that can help you, your family or your friends save for children's education after high school. RESPs are registered with the Government of Canada so that savings for education can grow tax-free until the person named in the RESP enrolls in studies after high school.

A child named in an RESP is known as a beneficiary. A parent, grandparent, other relative, or friend, can open an RESP for a child. The person who opens an RESP is called a subscriber.

Benefits of your investment in an RESP

When you have an RESP, you can start saving immediately for education in the future. Many parents wonder how much to save. They also wonder how soon they should start. The answer is simple. Save as much as you can afford. Start today. Click here to find out how much you will need to pay for your child's education in the future.

By starting early, tax-sheltered earnings on your savings can grow surprisingly quickly. The earlier you open RESP the longer your savings have time to grow. Click Illustration to learn about it.

Further, if you are saving for a child’s education, the Government of Canada will provide you with additional funds that are only available if you have an RESP. Click the Canada Education Savings Grant and the Canada Learning Bond to find out how to get this money.

Type of Plans - Choosing the Right RESP For You 

You can choose from three general types of plans: individual plans, family plans, or group plans.

Individual RESP

Anyone can open an individual RESP and anyone can contribute to it. This includes parents, grandparents, aunts, uncles and friends. You can even contribute to an individual plan for yourself. Contributions to this type of plan can be made up to December 31 of the 31st year after the plan's creation date (ex.: for a plan created in 2008, contributions may be made until December 31, 2039).

Family RESP

These plans can have one or more beneficiaries. However, each beneficiary must be connected by blood or adoption to each living contributor, and be under 21 when named. This includes child, grandchild, brother and sister but excludes nephew, niece, subscriber's spouse and the subscriber. Contributions to this plan can only be made until a beneficiary turns 31.

Group RESP

A group RESP pools the contributions of many investors. Contributions are made according to a schedule and are used to buy plan units. The amount and frequency of these contributions stay the same as long as the beneficiary has not attained 18 years of age. The date the plan matures is set at the time of enrolment and is based on the child’s birth date. At maturity, your child shares in the pooled earnings of investors with children the same age as yours. If the beneficiary fails to qualify for payment, the earnings are distributed among other beneficiaries of the same age who do qualify. And if you drop out of the plan before it matures, you forfeit all of your earnings to the group.

Call us at 416-493-0101 or 416-458-4577  and we will help you decide on the type of RESP that best meets your needs.

How much money can I save in RESP?

Click here to get an RESP Illustration for your child.

What do I need to open an RESP?

You need to get a birth certificate for your child from the provincial or territorial government where your child was born. You will also need your own Social Insurance Number (SIN) from the Government of Canada and a SIN for the child you are saving for. There is no cost or age limit to get a SIN. Even a baby can get one.

How much money can I put into an RESP?

Starting in 2007, there is no annual limit for contributions to RESPs . For each beneficiary, the lifetime limit on the amounts that can be contributed to RESPs is $50,000.

Minimum contribution is not limited but determined by a RESP provider.

Note: According to the Income Tax Act, period of time when you can make your contributions in RESP is limited, and the RESP must be terminated by the end of the 35th year after the year the plan was opened.

How soon can the person(s) named in the plan start using the money?

As soon as a child named in your plan is enrolled in a qualifying educational program, he or she can start receiving payments from the RESP called Educational Assistance Payments (EAPs).

What is a qualifying educational program?

Qualifying educational programs include apprenticeships and programs offered by a trade school, CEGEP, college or university.

Usually, a qualifying educational program is a course of study that lasts at least three weeks in a row, with at least 10 hours of instruction or work each week. A program at a foreign educational institution (outside Canada) must last at least 13 weeks.

RESP funds can be used for full or part-time study in a qualifying program.

Commencing in 2007, students 16 years of age or older will be able to receive up to $2,500 of EAP for each 13-week semester of part-time study in a program that requires that at least 12 hours per month be spent on courses. Previously, the rules required that at least 10 hours per week be spent on post-secondary education, which restricted the ability to use RESPs to fund part-time studies.

What is an Educational Assistance Payment?

An Educational Assistance Payment (EAP) is a payment from an RESP to help a beneficiary continue his or her education after high school. An EAP is made up of:

• the Canada Education Savings Grant (CESG),  

• the Canada Learning Bond (CLB), and

• income earned on   the money saved in the RESP. 

Do I pay tax when I take money out of an RESP?

You will not pay taxes on the money you have invested in the RESP. You will get your invested money back without paying tax.

The interest earned on the investment in your RESP will be taxed in the hands of your child, but only when the RESP is closed or money is taken out to pay for the education of your child. Since many students have little or no other income, they can usually withdraw the money tax free.

When Your Beneficiary Does Not Continue Education After High School

If a child decides not to continue education after high school, you may be able to:

• Wait for a period of time, he or she may decide to continue studying later;

• Use the money for a brother or sister who does continue education after high school;

• Transfer the money into a Registered Retirement Savings Plan (RRSP) to help you save for your retirement.

• Withdraw the money: you will receive your personal contributions tax-free and will pay tax on the investment income earned in the RESP.

Contact us for more information about RESP we offer to our clients and to get an illustration for your child showing how much money you can save for his or her post-secondary education.