Registered Education Savings Plan (RESP) FAQsUpdated on Sep 01, 2015
Why should I open an RESP?
If you open an RESP, you can save money for a child’s future education through the Canada Education Savings Grant and the Canada Learning Bond.
Is there an age requirement to opening an RESP?
No, there is no age requirement to opening an RESP. It is best to start early.
Do I have to be a child’s parent to open an RESP?
Anyone including guardians, grandparents, other relatives or friends can open an RESP for a child.
Where do I go to open an RESP?
You can open an RESP at most financial institutions, group plan dealers or certified financial planners.
What documentation do I need to open an RESP?
You need to get a social insurance number and you also need to provide a birth certificate or a permanent resident card.
Do RESPs require a minimum payment?
It depends. Some types of RESPs have no minimum deposit requirements, while others do. The Government of Canada will still add to your savings, no matter how little you put into your child’s RESP account.
Do I need a bank account to open an RESP?
You do not need a bank account to open an RESP.
How much can I contribute to an RESP?
You can contribute up to $50,000 for each child, total.
How often must I contribute to an RESP?
Some RESPs require monthly contributions while other allow you to contribute whenever you want. It depends on the RESP.
If my child continues education after high school, how is my RESP taxed?
Your money grows tax-free while it is in your RESP.
You don’t get a tax deduction for the money you put into an RESP.
The money that your investment earns while it is in the RESP won’t be taxed until money is taken out to pay for your child’s education.
Money paid out of the RESP as an Educational Assistance Payment is taxed in the hands of the student. Since many students have little or no other income, they can usually withdraw the money tax-free.
The money that you have put in the RESP is returned to you, tax-free.
How is my RESP taxed if my child does not continue his or her education after high school?
You will not be taxed on the amount you contributed to the RESP, but you will have to pay taxes on the money that you earned in your plan as interest. This money is called “accumulated income”. It will be taxed at your regular income tax level, plus an additional 20 percent.
The money that you have put into the RESP is returned to you.
The Canada Education Savings Grant can be shared with a brother or sister if they have grant room available—otherwise, the grant must be returned to the Government of Canada.
When you close your RESP, you will have to pay tax on the earnings in the RESP.
Talk to your RESP provider to find out about any conditions that may apply to the plan if your child does not continue his or her education after high school.
Can more than one RESP be opened for a child?
Yes, but the total contribution is still $50,000 total not per account.