May 15, 2016

Registered Education Savings Plans (RESPs)

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Benefits of the RESP

  • RESP contracts can be set up as individual plans or family plans
  • RESPs receive a minimum of 20% from the Canada Education Savings Grant (CESG) on each contribution made**
  • For a limited time – B.C. Training & Education Savings Grant of $1,200 for children born in 2006 + (apply after age 6)
  • Contributions (including grant money) grows tax free
  • RESPs can be left open for 36 years
  • RESPs can pay for full or part time studies in a qualifying college, university, trade school, or apprenticeship programs.
  • ** Lower income families could earn up to 40% of each contribution. See CRA Website.

Limitations

  • There are no annual limits to contributions but there is a lifetime limit of $50,000 per beneficiary. This limit is for the personal contributions only, it does not include grants received.
  • Canada Education Savings Grant (CESG) – annual limit of $500 in grant (at 20% that is $2,500 in contributions) and lifetime limit of $7,200 in grant (contributing $36,000 over lifetime)
  • CESG contribution grant room can be carried forward: 1998 to 2006 = $400 per year and 2007 on = $500 per year.
  • Age 16 and 17 limits: RESP can only receive grants if; a minimum of $2,000 has be made and not withdrawn before the child turns 16; or an annual minimum of $100 was contributed and not withdrawn in any 4 years before the beneficiary turns age of 16. So the very latest you can start saving for a child is in the year the beneficiary turns 15.

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