RESP
Registered Education Savings Plan
What is an RESP?
An Registered Education Savings Plan (RESP), is a tax-advantaged account in Canada designed to help parents save for their children’s post-secondary education. You’ll enjoy tax-free growth, and may be eligible to receive grants through the Canada Education Savings Grant (CESG), Canada Learning Bond (CLB), and other government incentives.
Why open an RESP?
Tax-Free Growth
Investments within an RESP grow tax-free until withdrawn, allowing your savings to grow more quickly than they would in a taxable account.
Government Grants
The Canadian government provides grants to enhance your savings through the Canada Education Savings Grant (CESG), up to a maximum of $7200
More than just tuition
Contributions to an RESP can grow tax-deferred until they are withdrawn. and the government may provide up to $7,200 in direct contributions to the account. Each year, the federal government may provide up to $500/year.
There are no annual contribution limits or any limits on the number of RESPs you can have. The lifetime contribution is capped at $50,000 per child and RESP contributions can be made for up to 31 years.
How does RRSP work?
An RRSP is a retirement savings and investing vehicle for employees and the self-employed in Canada. It offers tax benefits to encourage retirement savings, such as tax deductions for contributions made.
Your RRSP contribution limit for 2024 is 18% of your 2023 earned income or $31,560 (whichever is lower), plus any unused contribution room from previous years. An RRSP can include a variety of investments like stocks, bonds, GICs, and
Who can open one?
Canadian residents with a Social Insurance Number (SIN) who are at least 18 years of age.
You can set up an individual plan or a family plan for your beneficiary.
Tax Treatment
Tax-Free?
Tax-Deductible?
Tax-Deferred?
Numbers to Know
Note: There is no limit to the number of RESPs accounts you may open. However, the contribution room remains constant amongst all accounts. Penalties may arise for over-contribution.
You can invest your contributions in a variety of investment vehicles and withdraw at a reduced tax rate as a student.
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