Registered Education Savings Plan (RESP) is a tax-advantaged savings program available to Canadian residents, designed to help parents and guardians save for their child's post-secondary education.
Features of the RESP
Canada Education Savings Grant (CESG): The government provides a matching grant of up to 20% on the first $2,500 contributed annually per child. Depending on the family's income, additional CESG grants may be available.
Contributions made to an RESP grow tax-free until they are withdrawn. This allows the investment earnings to compound over time without being subject to annual taxation, maximizing the potential growth of the savings.
Flexible Contribution Limits
There is no annual limit on RESP contributions, but there is a lifetime maximum of $50,000 per beneficiary. This allows parents to contribute based on their financial capabilities.
Carry-Forward of Grant Room
If the maximum Canada Education Savings Grant (CESG) is not received in a particular year, unused grant room can be carried forward to future years. This feature allows parents to catch up on missed grants