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- Registered Education Savings Plan (RESP)
Registered Education Savings Plan (RESP)
Overview
A better tomorrow for your family starts today.
As post-secondary education costs continue to spiral, an RESP helps families save for their children or grandchildren. It's a flexible way of investing in a child's future and a practical way to defer tax to the beneficiary, who will likely be in the lowest tax bracket when funds are withdrawn. And contributions can qualify for government grants!
Key Features
- Funds grow tax-sheltered until the child withdraws money for post-secondary education
- Principal amount can be withdrawn anytime, tax-free
- Family plans allow the contributor to designate several children as beneficiaries
- Accounts can stay open for up to 36 years if your child chooses to delay post-secondary education
- Parents, guardians, grandparents, other relatives, or friends can open an account for a child
- A variety of investment options are available, such as term deposits and mutual funds
- Eligible deposits in registered accounts have unlimited coverage through the Financial Services Regulatory Authority (FSRA)
Government Contributions
Canada Education Savings Grant (CESG)
Everyone likes ‘free money.’ When you invest in a RESP, the federal government will contribute a CESG equal to 20% on up to $2,500 annually for each beneficiary up to 17 years old. This means $500 of free money each year with a lifetime limit of $7,200! Lower income families may qualify for an increased CESG of 30-40%. To receive this grant, the child must have a social insurance number. Applications for this grant are available at Moya Financial.
Canada Learning Bond (CLB)
The Canada Learning Bond (CLB) is money that the Government adds to a RESP for children born in 2004 or later from low-income families. This money helps to pay the costs of a child’s full- or part-time studies after high school. The eligible beneficiary receives a $500 grant the first year, plus $100 each subsequent year they qualify, up to a maximum of $2,000.
To learn more about RESPs, visit the Government of Canada website.
Did you know?
We also offer the Moya Financial Scholarship to students entering their first year of university or college study.