Generic filters
Exact matches only
Filter by Custom Post Type

Toronto, Canada

312 Adelaide Street West, Suite 301
Toronto, Ontario - M5V 1R2
Fine Print

RESPs 101: What is an RESP?

Written by Alanna Schiffer

So, you’ve got an active little one at home? Congratulations! It’s a great time to finally understand this whole RESP business. Why now? Well, read on and you’ll see. RESP stands for Registered Education Savings Plan. It’s a way to help you save money for your child’s post-secondary education. You may have already known that part. But we’re here to help you understand how opening up an RESP now can open up a whole world of possibilities for your child or grandchild. Here’s a quick video that explains even more.

The ABCs of RESPs

Here are a few quick facts about RESPs:

Anyone can open an RESP for a child. The earlier you start one, the better, but it’s also better late than never when it comes to taking advantage of government grants. If your child is 15 years or older, conditions apply for collecting grants.You can contribute a maximum of $50,000 per child (beneficiary) over the life of the plan. How much or how often you contribute depends on your specific plan, but generally, it’s a good idea to contribute monthly or annually. Your contributions will be matched by the federal government. The Canadian government will match 20% (up to $500) in a given year, as part of the Canada Education Savings Grant (CESG). The lifetime maximum grant is $7,200 per child (beneficiary). Curious to see a breakdown of where that money would go? Use the planner tool from CST Spark to see exactly how your money could be invested. You can start with as little as $10 or simply tuck birthday money away from time to time.

There’s no tax deduction for these contributions, but you can withdraw your contributions tax-free. Your child will receive payments from their RESP once they have enrolled in a post-secondary program. These payments are called educational assistance payments (EAPs). Your beneficiary will have to pay taxes on their EAPs but because their income is likely low, they will pay little to no tax.

Another important point: there’s no pressure with an RESP. It can stay open for up to 36 years, which means your child has plenty of time to make decisions about their future. If they don’t pursue post-secondary education, you can transfer the savings to another child to use, or withdraw your contributions tax-free. (Some conditions apply.)

An RESP helps you save for tomorrow, today. 

Nobody can tell you exactly how much tuition will cost when your child or grandchild goes to university or college, but rates are on the rise. That’s why it’s important to start saving as early as you can and allow yourself time to save up. It’s not too late. If you’re serious about saving for their future, PLN recommends CST Spark as our choice for a smart, simple and super flexible RESP.

In addition to the Canada Education Savings Grant (CESG), there are additional grants you may be able to take advantage of, including the Canada Learning Bond and several provincial education savings incentives. CST Spark will help you navigate those too.

In a nutshell, an RESP empowers your child. It lets them dream big.

Someone once said, “The days are long, but the years are short.” It’s hard to imagine what your toddler will be when they grow up, but it’s true. Your child will be leading their own life sooner than you realise, and an RESP provides the freedom they need to keep all their options open. Start saving with an RESP for your child in just five minutes.

*Opinions expressed are those of the author, and not necessarily those of Parent Life Network or their partners.