Registered Education Savings Plan (RESP)
The RESP (registered education savings plan) is an investment account that allows you to save for your children's or grandchildren's post-secondary education. Consequently, you get the benefits of government grants to build your savings faster. The RESP is a contract between the subscriber (an individual) and an organization or person (the promoter). The subscriber contributes to accumulating tax-free earnings.
The RESP is a tax-advantaged savings plan for a child’s future education, partially funded by the Canadian government. The savings in this account grow tax-free, and the federal government contributes to the RESP through the Canada Education Savings Grant.
Understand RESPs
Some entities are involved in a registered education savings plan, such as the subscriber, beneficiary, and promoter.
Subscriber: The person who opens the RESP account and contributes to it.
Beneficiary: The child receiving the contributions for education-related expenses.
Promoter: The organization providing RESPs, like a credit union, bank, or group scholarship provider.
Benefits of RESPs
• Your child receives better RESP grants.
• The savings grow tax free.
• There are no taxes on educational assistance payments.
• Subscribers can use investment options like ETFs, mutual funds, GICs, bonds, and stocks.
• Anyone in your family or circle of friends can help.