Registered Education Savings Plan – Know More about It


An RESP is an easy way to help set your child up for future education and success by preparing financially for post-secondary education.

What is an RESP?

An RESP, or Registered Education Savings Plan, is a tax-deferred, government-assisted, flexible, investment plan to help save up money for post-secondary education for your child This plan can be opened at any time throughout a child’s life until he or she reaches the age of 14-years-old. It can continue to grow until the child turns 18 years of age. You can contribute to the fund all at once or over a period of time, contributing up to $50,000. Once the plan is opened, anyone such as uncles, aunts, godparents, and grandparents, can contribute. You can get a tax benefit for contributing.

Why Contribute?

When you contribute to an RESP, you will see there are tax benefits for all contributors. All interest payments, capital gains earned in the RESP, as well as dividends, are not taxable. When the value withdrawn from insurance exceeds the amount contributed, that is when it will be taxed.

Accessing the RESP

When the child is ready to use the RESP, which would be when the child wants to pursue post-secondary education, he or she will need proof of acceptance from a post-secondary institution. During the years of contributing, if the plan received government grants, those will already have been put into the plan.

Once the student takes out money from the RESP, the interest will be taxed. The money can be returned to the financial institution if the student decides not to go for post-secondary education. As well, contributors can get their money back and grants would not be redeemed and returned to the government. But If the child postpones it, RESP money can be saved until the child turns 35.

Don’t worry if your child wants to wait a while after high school before taking advantage of the RESP. An RESP plan can be kept open until the child turns 35, although you should check with your own RESP to confirm the length of time you have agreed on.

EAPs, What are They?

An EAP, or Educational Assistance Payments, comes from the RESP. They are a combination of grant money and investment earnings. Once the child is enrolled in post-secondary education, the child can start receiving these payments. The student is the one who will pay the taxes on the EAPs, but either the child or parent can withdraw money.

An RESP gives family and friends time to grow the plan to give the child a financially stable education.