What are RESPs?
RESPs serve as a financial vehicle for education, analogous to RRSPs for retirement savings. They enable individuals to accumulate funds for their child’s post-secondary education, thereby providing them with the greatest opportunity to pursue their aspirations and achieve their dream careers.
How do RESPs work?
1. Contribute to the plan
By contributing to your child’s Registered Education Savings Plan (RESP) and taking advantage of the generous government grants available, you can commence saving early for their future education.
2. Accrue and Save
Together, your consistent contributions and government grants yield returns. Furthermore, your Registered Education Savings Plan (RESP) accumulates tax-deferred.
3. Reap and Realize
Your contributions are returned to fund your child’s education. Your child receives the grants, and the total return from the Registered Education Savings Plan (RESP) is accumulated.
The Main Advantages of an RESP
- Accrue more thanks to government grants
- Recover the money you invest at a pace that suits you
- No loss if your child does not go on to post-secondary education
- Opening an RESP 100% online
Your Frequently Asked Questions
Who can contribute to an RESP?
An individual RESP can be opened by anyone (parent, grandparent, tutor, friend, etc.) who wants to save for a child’s postsecondary education. They must be over 18 years old, reside in Canada and have a social insurance number.
What is the maximum RESP contribution?
The overall contribution limit for each RESP beneficiary is $50,000. Although there is no annual limit on contributions, contributions in excess of $2,500 per year are not eligible for grants.
What is the process of widthrawing money from RESP?
A request must be made to withdraw funds from a registered education savings plan for post-secondary education. This request may be submitted as soon as the beneficiary is enrolled in the current or upcoming semester, and at the latest within 6 months following the end of the semester.
What are the eligible educational institutions where I can use the money saved in an RESP?
The RESP can be used to finance various types of full-time or part-time educational and vocational training, such as:
The money saved in an RESP can be used for living expenses such as housing, school supplies and food while at school.
- Post-secondary studies (college and university)
- Studies in an eligible trade or business school
What criteria must be met to use an RESP?
The educational institution must be an accredited institution and the educational program must last a certain number of weeks, and include a certain number of hours per week. Contact me to learn more details.
Do I need a separate RESP for each child?
No. We offer two types of plans: individual and family. If you choose the family plan, you can add one or more beneficiaries, under certain conditions. Ask me about the different terms for each type of plan.
Is it possible to use unused contribution room from previous years?
Yes. Unused contribution room can be carried forward a maximum of one year at a time. For some grants, unused room accumulates from the time the plan is opened. This means that if no contributions are paid into an RESP in a given year, or if contributions are lower than the limit established by the government, grant room can be carried over to subsequent years for so long as the child is eligible.
Is it possible to choose the investments offered for the RESP?
Yes. There are several investment options available. You can select your investments based on your risk tolerance. An advisor can help you analyze your investor profile.
Is an RESP considered an asset when calculating student financial assistance?
No. Funds saved in an RESP are not considered income when the beneficiary applies for student financial assistance. Note that Education Assistance Payments (EAPs) are taxable and are added to your child’s income. This is an advantage, because students often have a modest income and therefore pay little or no income tax.
If you have more questions, contact me and let’s talk.
Disclaimer: Some information on this webpage might not reflect the current information set by my product partners in the insurance industry as their policies might change without prior notice. Contact me so I can provide you with the most recent information. Thank you.
Mercedes C. Ortilla 