A Registered Education Savings Plan (RESP) is a savings account designed to help parents save for their children’s post-secondary education. It has the advantage of accumulating tax-free interest as well as allowing for parents to apply for the Canada Education Savings Grant. With a CESG, the federal government will contribute 20 per cent of your annual RESP contribution to a maximum of $500 per child per year. There are other benefits as well:
Tax-deferred investment growth
Contributions made to an RESP can accumulate and grow tax-free over the life of the plan.
More control and flexibility
With an RESP, you decide how much you contribute each year, up to a lifetime contribution of $50,000 per beneficiary. Family and friends can also contribute to the plan.
Low minimum investment
You can start an RESP with a very small initial investment, as many have no minimum deposit.