Registered Education Savings Plan (RESP)

With the help of an RESP, you, as a parent, friend or family member can start putting aside money for a child's post-secondary education. Your contributions can grow surprisingly quickly when you use this special savings account, as the Government of Canada offers the Canada Education Savings Grant and the Canada Learning Bond exclusively to RESP subscribers.

Opening an RESP is not difficult. In fact, it only takes two simple steps:

  • apply for a Social Insurance Number (SIN)
  • make an appointment at EKC, remember to bring your SIN, Birth Certificate and Care Card

Upon enrolling in a qualifying educational program, a course of study that lasts at least three consecutive weeks, with a minimum of 10 hours of instruction or work per week — the child named in your plan will become eligible to receive payments from the RESP to help cover the costs of education after high school. Find out more about using your RESP and Educational Assistance Payments (EAPs).

  • British Columbia Training and Education Savings Grant (BCTESG) – Families in British Columbia are encouraged to start planning and saving early for their children’s post-secondary education or training programs. To help, the B.C. Government will contribute $1,200 to eligible children through the B.C. Training and Education Savings Grant.
  • Canada Education Savings Grant (CESG) – all contributors receive 20% of the first $2,500 of RESP contributions each year until the end of the year the child turns 17, with a lifetime maximum of CESG amount of $7,200 per child
  • Canada Learning Bond (CLB) is given to children from families who are eligible to receive the National Child Benefit Supplement when an RESP account is opened on their behalf (irrespective of contribution amount). An initial CLB of $500 is provided by the federal government to children born on or after Jan. 1, 2004, plus an additional $100 per year of eligibility until age 15, up to a maximum of $2,000.
  • Canadian Scholarship Trust Foundation – This will give them more time to save and ensure they have enough money to maximize the grant room available to them.

Tips for Parents

A portion of the $2,500 contribution needed to maximize the annual CESG money could come from gift money such as birthdays, Christmas, or the Universal Child Care Benefit (UCCB).

  • if you can't maximize it in a given year you take advantage of carry-forward CESGs
  • if you did not contribute to your RESP in a given year you can unutilized $500 CESG forward to the next year
  • If you plan to make a contribution of over $5,000 you may split a large contribution into two payments over two years to maximize grant money

Common mistakes that could result in the loss of free grant money:

  • Pulling out the money invested in an RESP too early as you will lose all of the matching grants
  • Deadlines – EKC will help you understand what deadlines pertain to you as to not lose out on grant money

Grants are taxable in the hands of the student once they are ready to be used.

Withdrawals:

  • for the Educational Assistance Payment (EAP) and the Post-Secondary Education Capital withdrawal (PSE). Withdraw from the EAP as soon as the student begins post-secondary education as to use as much of the grant as possible up front
  • to minimize tax is to spread out the withdrawals on your RESP over the entire post-secondary career of the beneficiary rather than taking all of the money out in year one
  • RESPs and grants can go toward many kinds of education, not just university. The funds can be used toward a trades school, art school or college program


Mutual funds, other securities and securities related financial planning services are offered through Qtrade Advisor, a division of Credential Qtrade Securities Inc.

 

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