What is an RESP?
A Registered Education Savings Plan (RESP) is a savings vehicle that allows subscribers such as parents, grandparents, friends and other relatives to save for your child or other beneficiary's post-secondary education. The cost of post-secondary education is rising dramatically. At the same time, today’s job market demands higher learning and specialized skills. An RESP is a smart, safe way to proactively save money towards your child’s education so that when they’re ready to study, you’ll be ready to help pay for it.
Your RESP is registered with the Canada Revenue Agency, and although your contributions are not tax deductible, your contributions grow tax-free until your child or other beneficiary needs the funds. RESPs have an additional feature that makes them unique from other registered accounts and investment portfolios in the form of government grants.
How RESPs help you save
Opening an RESP can help you save for your child’s education, but that’s not all it can do for you. Here are a few more benefits that you get from opening an RESP:
- Government grants - You get access to federal government grants like the Canada Education Savings Grant (CESG) and provincial government grants (depending on where you live), something you can’t get from a Registered Retirement Savings Plan (RRSP) or Tax Free Savings Account (TFSA).
- Tax-deferred growth - You can grow income on a tax-deferred basis. This income will eventually be taxed in the hands of your child when he or she is student and pays little to no tax at all.
- Peace of mind - You can enjoy the relief that comes with knowing that when your child is ready for post-secondary education, you’ll be ready to help pay for it.
Getting an education means getting ahead
More than ever, Canadian and international job markets require degrees and specialized skills acquired through post-secondary education.
Check out these facts:
- University graduates earn on the average 50% more than other full-time workers who do not have a university degree.1
- 3 out of 4 new jobs require a post-secondary education2
At the same time, the cost of education is increasing dramatically. Find out what the future cost of sending your children to college or university will be by the time they are ready to go.