What is an RESP?

An RESP is opened by a subscriber, such as a parent or grandparent, for the student, who is the beneficiary. A lifetime maximum of $50,000 per child can be contributed. If the child is under 17 years old, the federal government will also put money into the account, either as a grant or a bond. Depending on where you live, your provincial government may contribute a grant as well. Students can begin withdrawing money from RESPs when they are enrolled in an eligible university, college or trade program. An RESP can stay open for 36 years.

Unlike RRSPs, RESP contributions are not tax-deductible. Withdrawals of your principal contributions are not taxable; however, withdrawals of the grants/bonds or investment earnings (called educational assistance payments) are counted as part of the student’s taxable income. 

Example: “The deadline to contribute to your RESP for the year is December 31.”

Read more on RESPs:

• What is an RESP?
  RESPs are a powerful education savings tool for parents. Here’s why.
• Student Money Guide
  Financial intelligence isn’t learned by osmosis—but it also doesn’t have to be complicated or intimidating. This guide breaks down how to get kids into the habit of saving and spending wisely, all the way through how to cover post-secondary education costs, with tips for both students and the adults in their lives.
• How do RESPs work, and what’s the best way to fund them?
  An RESP is one of the best ways to save for a child’s education. Compare three ways to fund an RESP and maximize government grants.
• My three kids chose different educational paths. How do I withdraw RESP funds in a way that’s fair to them and avoids unnecessary taxes?
  A Certified Financial Planner explains how RESP withdrawal and taxation can work for each of your children, regardless of their educational path.
• RESP guide: Making the shift from saving for your child’s post-secondary education, to funding it
  Parents may spend years contributing to Registered Education Savings Plans for their kids, but only realize when it’s time to pay for college or university how little information there is about the right way to make withdrawals. Here’s step-by-step advice from a Certified Financial Planner.
• Unconventional ways of investing in a family RESP
  Surprise: a lump-sum contribution is likely to result in more money, even though you forgo government grants. Plus, reassurance for blended families who want to hold a family RESP with both parents as joint subscribers.
• How to protect family RESPs from being raided
  Morley is concerned about the education savings he’s putting aside for his son’s twin boys. What happens if their mother withdraws the RESP money “for her own purposes”?
• What happens to extra RESP money after the kids finish university?
  How to transfer extra RESP money to an RRSP in the most tax-efficient way

About MoneySense Editors

MoneySense editors and journalists work closely with leading personal finance experts in Canada. Since 1999, our award-winning magazine has helped Canadians navigate money matters.

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