Registered Education Savings Plan (RESP): What Is It?
Open an RESP
What is an RESP?
An RESP (Registered Education Savings Plan) is an investment account that helps you save for a child’s post-secondary education—and their future. In addition to the money you invest, the Canadian government also contributes funds in the form of grants to help your investment in the future. Your RESP grows tax-free until the funds are withdrawn. Since many students have little or no other income, they can usually withdraw money from the RESP tax-free.
Find out why an RESP is the best way to save for your post-secondary education journey.
What’s the Difference Between a Family Plan and an Individual Plan?
Family RESP plans
Family RESP plans can be opened for one or more children under the age of 21 who are related by blood or adoption.
The contributions you make to the RESP are designated to each child in the plan in order for them to attract their own earnings and government grants — but the earnings can be shared among the children (up to $7,200 for the Canada Education Savings Grant). This means that if one child does not attend post-secondary education, or if they do not need all of the funds saved, the remaining funds can be used by the other children.
Individual RESP plans
Individual RESP plans can be opened for a single child by anyone (including an aunt, uncle, friend, godparent, self) who wishes to invest in a child’s post-secondary education—the subscriber does not need to be related to the child.
This plan is best suited for a subscriber who is not a parent, grandparent or sibling of the child; for an adult (18-21) who wishes to save for their own post-secondary education; or for a child who is over the age of 21.
How Does an RESP Work?
Thinking about investing in the future can be a bit overwhelming, but starting an RESP is pretty straightforward—and we’re here to help you along the way. We’ve summarized the process into three easy to steps:
1. Set Up Your RESP Account
It takes about ten minutes to set up your RESP once you have all your information handy. You, and each child you’re saving for, must have a valid social insurance number (SIN). You’ll also need a government-issued ID such as a driver’s license for yourself, and personal information for you and your child(ren).
Apply for a SIN if you don’t already have one.
2. Contribute and Grow Your RESP
Once you’ve set up your account, take some time to figure out what you can afford and how often you can contribute to your RESP. If you’re not sure how much you can afford, remember that we’re here to help you create a plan that works for you and your family.
With the combination of your contributions, government grants and investment income, you’ll be able to see your RESP fund grow as your child(ren) gets closer to graduating high school.
3. Use Your RESP Funds
When it’s time for your student to head off to college or university, simply withdraw what you need from your RESP when you need it. We can help you withdraw the smart way, keeping tax rates and your student’s needs in mind.
How to Maximize Government Grants?
Several grants provided by the government match your RESP contributions to maximize your savings and offer support to families with modest incomes. Making the most of these grants is a great strategy along your savings journey. We’re here to show you how.
Canada Education Savings Grant (CESG)
This grant is provided by the Canadian government and is the cornerstone of contribution matching. The government matches 20% of your contributions up to maximum grant amounts of $500/year and $7,200 over the lifespan of your RESP. Once you’ve set up your Embark Student Plan, we’ll automatically apply for this grant on your behalf.
If you started late or previously contributed less than $2,500/year, you can carry forward those missed amounts to current or future years. Read more about the CESG and carry forward room.
Additional CESG
Lower and middle-income families may qualify for a slightly modified version of the CESG, which provides an extra 10% or 20% in grants to the first $500 of annual contributions each year. Here’s a helpful overview.
See how grants can add up to support your child’s education
| Net Family Income | $50,197 or less | More than $50,197 to $100,392 | Over $100,392 |
|---|---|---|---|
CESG – Paid on first $2500 on annual contribution | 20% = $500 | 20% = $500 | 20% = $500 |
ACESG – Paid on first $500 on annual contribution | 20% = $100 | 10% = $50 | 0% = $0 |
Canada Learning Bond (CLB)
For families with modest incomes, the CLB is based on net family income and the number of children in a family. This bond provides a one-time initial grant payment of $500. From there, the government will automatically add $100 to your RESP for each year of eligibility until the child is 15-years old. That could mean as much as $2,000 in additional government grants. We can help you learn more about this.
Special requirements for 18-20 year olds
This age group may still be eligible to receive the CLB and get up to $2,000 into an RESP. The amount received depends on the number of years they were eligible to receive the CLB before turning 15. We can help you learn more about this.
How the Canada Learning Bond is Calculated
| Number of children | Adjusted net family income for the 2022-2023 year |
|---|---|
1 to 3 | $50,197 |
4 | $56,636 |
5 | $63,101 |
Our Specialists will ensure you get all the grants you’re entitled to.
When and How Much Should I Save?
With the average post-secondary education costing roughly $90,000, students need more help than ever saving for their future. Today, the average family only saves $15,000 for the post-secondary education journey. And, while 92% of parents think an education is important, only 50% have RESPs.
So, how much do you need to save and when should you start?
There’s no one size fits all approach to financial planning. Whether you start saving the moment your child is born or when they start school, the important thing is to take the leap and get started. Even if you start small and contribute as often as your budget allows, your savings will grow and over time you’ll be on a stable path towards their education—and their future.
More questions?
What are the Rules for an RESP?
While setting up, contributing to, and withdrawing from your RESP is straightforward, there are certain rules you need to keep in mind. Knowing what they are—and that we’re here to help you with them—will make following them straightforward as well. For example, knowing your contribution limits, what’s considered a qualified post-secondary education or training program and how to withdraw funds without penalty will help to make sure you get the most of your RESP.
Saving for the Future has Never Been Easier
Answers to Commonly Asked Questions About RESPs
Create Your Tomorrow
You and your child are moving forwards together. Every step gets you closer to everything you hope for and everything they can be. It’s a destination where needs and dreams align, supported by your plans for a post-secondary education. We’re committed to your success and want to show you how.
