RESP's

Registered Education Saving Plan (RESP)

RESPs are an excellent way for families to accumulate money for future education needs. A Registered Education Savings Plan is essentially a tax-deferred savings plan typically opened for a future post-secondary student.

Registered Education Savings Plan (RESP) - Frequently Asked Questions

Types of RESP's

1. Non-family Plans - One beneficiary with no restrictions on who can be a beneficiary, free to decide when and how much you want to contribute and also able to take breaks in contributions at any time.
2. Family Plans - One or more beneficiary, each beneficiary must be connected by blood or adoption to each living subscriber under the plan, or have been connected to a deceased original subscriber. Able to take a break in contributions at any time.
3. Group Plans -  Usually offered by non-taxable entities like foundations. Administered on an age group concept. Contributions to group plan calculated by the promoter's actuary. Amount and frequency of these contributions stay the same as long as the beneficiary has not reached 18 years of age.

RESP's Withdrawals

• Withdrawals from an RESP can be used to cover expenses for education-related costs, the income and grant received is taxed in the hands of the beneficiary (the student), not the contributor. Assuming the beneficiary (the student) can withdraw money over a few years and is not in a high tax bracket at the time, the income should attract very little if any tax at all.
• In the event the beneficiary does not pursue post-secondary studies, up to $50,000 of the RESP may be transferred to the contributor's RRSP, provided this person is under 71 years of age and this person has RRSP contribution room available.