What is a Registered Education Savings Plan (RESP)? A Registered Education Savings Plan (RESP) is a special savings plan, registered with the Government of Canada, which allows anyone – family or friends – to save for a child’s post secondary education. RESP contributions are not tax deductible; however the savings compound and grow tax free until the child is ready to go fulltime to a post-secondary educational institution. As long as your child has a valid Social Insurance Number (SIN) you, other family members, or friends can open an RESP. There are three general types of RESP plans.

  • Family RESP allows you to name one or more children as beneficiaries; however the children must be related to you – your own children, adopted children, brothers, sisters, or grandchildren
  • Individual (non-family) RESP allows you to invest for one child that does not have to be related to you. There are no age limits; therefore the RESP could be for you or another adult
  • Group RESP allows to you invest for one child that does not have to be related to you. Your savings are combined with those of other people. How much each child will receive is determined by two factors – the amount of money in the group account and the number of students of the same age who are in school that year

The Government of Canada has a number of saving incentives that are only available if you have an RESP:

  • Basic Canada Education Savings Grant (CESG) which is equal to 20% on the first $2,500 in annual contributions made to each beneficiary in your RESP
  • Additional Canada Education Savings Grant (CESG) which may be available on the first $500 contributed to an RESP annually
  • Canada Learning Bond (CLB) which is a bond of $500 for children born on or after January 1, 2004 to families entitled to the National Child Benefit Supplement and the child could also receive $100 each year until he/she reaches 15 years of age
  • Alberta Centennial Education Savings (ACES) Grant which will contribute a grant towards the RESP of every child born to or adopted by Alberta residents on or after January 1, 2005

If your child decides not to continue with his/her education after high school the RESP can be used in several ways. You can transfer the money to a brother’s or sister’s RESP or you can transfer the money to an RRSP. RESP accounts can remain open for up to 36 years so you can wait and see if your child changes his/her mind about higher education.

What are the benefits of an RESP?

  • Savings compound and grow tax free until the child is ready to go fulltime to a post-secondary educational institution
  • The Government of Canada has a number saving incentives that are only available if you have an RESP including the Basic Canada Education Savings Grant (CESG), Additional Canada Education Savings Grant (CESG), Canada Learning Bond (CLB), and the Alberta Centennial Education Savings (ACES)