Making the Most of a RESP

A Registered Education Savings Plan is a great tool to help your children or grandchildren with their future education costs. Here are some quick tips and reminders about how the account works and making the most of your contributions.

 

Maximize Government Grants

The Canada Education Savings Grant (CESG) matches 20% of your contributions, up to $500 per year and $7,200 lifetime per child. To get the full benefit, aim to contribute $2,500 annually per child.

 

Know Your Limits

RESPs have a lifetime contribution limit of $50,000 per beneficiary. Contributions beyond this can trigger a 1% monthly tax penalty on the excess. If multiple family members are contributing, coordination is key to avoid over-contribution.

 

Choose the Right Plan Type

• Individual Plans: Ideal for one child.
• Family Plans: Great for families with multiple children, allowing flexibility in how funds are used—provided the children are siblings by blood or adoption.

Tax-Deferred Growth

While your contributions aren’t tax-deductible, the investments within your RESP grow tax-free. Withdrawals used for education are taxed in the student’s hands, usually at a much lower rate.

 

Flexibility Matters

RESPs offer flexibility if your child doesn’t pursue post-secondary education. You can transfer funds to another child or even to your RRSP (within limits), helping you preserve the value of your savings.

 

If you’d like to review your RESP strategy or explore options for layering in education savings, feel free to reach out. We’re here to help you build a plan that fits your family’s goals.