What is a Registered Education Savings Plan?

A Registered Education Savings Plan (RESP) is a special savings account in partnership with the Canadian Government that helps you save money for your child's education. RESPs are available to all Canadian families who want to save money towards a child's college tuition.

How does a RESP help me save for my child's college?

An Registered Education Savings Plan provides parents a tax-free way to grow education savings while earning up to $7,200 in additional government contributions. Ranked among the most generous savings plans in the world, Canada's RESP enables parents to save thousands of dollars more than with conventional savings accounts. RESP subscribers may contribute up to $50,000 to a child's plan and can save as much as $100,000 or more in contributions, interest and government grants.

By starting early, RESP subscribers maximize the benefits for their student. The Canada Education Savings Grant (CESG), available to all RESP subscribers, matches 20% of your contributions until your child turns 17, up to $500 a year. The Additional CESG can provide another $600 a year towards your education savings.

A tax-sheltered education savings plan

The savings in your RESP account won't be taxed until your child withdraws the money for school. Because most students have little or no income, Registered Education Savings Plan payments are taxed at a significantly reduced rate. Many students pay no taxes at all on their withdrawals.

If your child decides not to pursue college, your contributions can be returned to you tax-free or you can use the funds to open an RESP for another child.

Who can open a RESP?

An Registered Education Savings Plan can be started by anyone who wants to save for a student's education costs. Parents, grandparents and friends can make contributions to individual, family or group plans. Students may even start an account for themselves.

Where can I open my Registered Education Savings Plan?

RESPs are available at most Canadian financial institutions and through certified RESP providers. It's important to choose a provider that knows all the rules and can assist you in getting the most out of your plan. A qualified and experienced provider will help you develop an investment strategy that makes the best use of your contributions and maximizes the funds available from government grants.

An investment for the future

Preparing for college requires careful planning and consideration. With an RESP you can:

• Save more than with conventional savings accounts
• Receive up to $7,200 in additional government contributions
• Grow your savings tax-free