What is an RESP and how much does the government contribute?
An RESP (Registered Education Savings Plan) is a long-term savings plan to help save for a child's education after high school, including trade schools, CEGEPs, colleges, universities, and apprenticeship programs. Adults can also open an RESP for themselves.
The government contributes through two main benefits:
- Canada Education Savings Grant (CESG): The government matches a percentage of your contributions, but specific rates and limits are not listed on the official page; check with your provider.
- Canada Learning Bond (CLB): For low-income families, no contribution required. Amounts and eligibility are not listed; check with your provider.
Note: British Columbia and Quebec offer additional provincial benefits; Alberta does not.
When should you open one?
There is no age limit. The earlier you open, the sooner you get grants and compound interest. Even if your child is in high school, you can still open an RESP and apply for grants as long as contribution room remains.
Can it be used for studying abroad?
Yes. RESP funds can be used for qualified educational institutions outside Canada, including universities in China. However, the school must be eligible, and you'll need proof of enrollment when withdrawing. Check with your RESP provider for specific requirements.
How to open and what to bring?
- Choose a provider: Banks, credit unions, mutual fund companies, etc. Tell them you want to apply for CESG and CLB.
- Provide documents: Usually the child's Social Insurance Number (SIN), birth certificate, and your ID. Check with the provider for the exact list.
- Apply for benefits: Fill out forms at account opening; the provider will apply on your behalf.
- Start contributing: Set up a contribution plan—monthly, yearly, or lump sum.
Common pitfalls
- Not applying for CLB: Low-income families may be eligible but must apply; it's not automatic.
- Over-contributing: There is a lifetime limit; exceeding it incurs penalties. The limit is not listed on the official page; check with your provider.
- Withdrawal restrictions: Funds must be used for qualified education expenses (tuition, books, rent, tools, transportation) to be tax-free. Non-educational withdrawals are taxed.
- Overseas school eligibility: Not all foreign schools qualify; verify before withdrawing.
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