Frequently Asked Questions: Registered Education Savings Plan
Frequently Asked Questions
1. Why should I open a Registered Education Savings Plan (RESP)?
Because the Government of Canada will help you save money if you open an RESP account through the Canada Education Savings Grant and the Canada Learning Bond. They are only available for your child if you open an RESP.
2. When should I open an RESP?
Now! Start early—your savings can grow surprisingly quickly.
3. Who can open an RESP?
Anyone can open an RESP account for a child—parents, guardians, grandparents, other relatives or friends.
4. Where can I open an RESP?
At most financial institutions (such as banks and credit unions) or with a group plan dealer or certified financial planner. See the list of RESP Providers.
5. What do I need to do to open an RESP?
It's simple! Just follow these 2 simple steps.
- Get a Social Insurance Number (SIN).
- You must have one for your child to open the RESP.
- There's no fee. However, certain documents, such as a birth certificate or permanent resident card, are required.
- Choose an RESP provider that best suits your needs.
RESP providers include:
- most financial institutions, such as banks or credit unions
- group plan dealers, and
- certified financial planners.
Shop around to find the RESP that best suits your needs. Consult these Questions for RESP Providers before you choose an RESP provider.
See a list of RESP Providers.
Note: It is very important to choose the right type of RESP you want to open.
- It's simple. Your RESP provider will help you decide.
- Start by visiting the Choosing an RESP Provider page.
- Read the Consumer Information page which provides further insight on RESP plans and RESP providers.
6. Do I need to deposit a minimum amount of money into an RESP?
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.
7. Do I need to have a bank account to open an RESP?
No. You can open an RESP without having a bank account.
8. How much can I put into an RESP?
Up to $50,000 for each child (named in one or more RESPs). Although there are no annual limits on contributions made to an RESP, the Canada Education Savings Grant will only be paid on the first $2,500 of contributions made every year. If the child has accumulated grant room, then the Canada Education Savings Grant will be paid on the first $5,000 of contributions made per year. For more information on accumulated grant room, please vist the Frequently Asked Questions section of the Canada Education Savings Grant.
9. How often do I have to put money into an RESP?
Every RESP is different.
- Some types require specific monthly contributions.
- Others let you put money into your RESP account whenever you want.
The sooner you start to save, the sooner you'll be earning interest, and the more your money will grow.
Even savings of $5 a week can quickly add up, especially when the Government of Canada adds money to your savings. Consult these Questions for RESP Providers to see what else an RESP provider could tell you.
10. Can I open an RESP for myself?
- You can open an RESP at any age.
- While you can open a plan for a child, you can also name yourself or another adult as the definition of beneficiary.
- Please note that all children up to the age of 17 are entitled to the Canada Education Savings Grant.
An RESP allows adults to earn interest on their registered education savings plan tax-free.
11. How is an RESP taxed (assuming the child continues education after high school)
- 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.
For more information, please phone the Canada Revenue Agency at 1-800-959-8281. Or visit the Educational Assistance Payments section of the Canada Revenue Agency's Web site.
12. How is an RESP taxed if a child decides not to continue 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. (Although there will be earnings on the Canada Education Savings Grant, the grant must be returned to the Government of Canada.) You may be able to reduce the taxes you have to pay by transferring your accumulated income to either your or your spouse's Registered Retirement Savings Plan. For more information, see the Accumulated Income Payments section of the Canada Revenue Agency's Web site.
- 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.
For more information, please call the Canada Revenue Agency at 1-800-959-8281 or visit their web site: http://www.cra-arc.gc.ca.
13. Can more than one RESP be opened for a child?
Yes. A child can be named as the definition of beneficiary of more than one RESP account. However, you should be aware of the following information.
- There is a lifetime limit of $50,000 that can be contributed for each child.
- Be sure to find out if anyone else is making contributions to a plan for that child so that you don't go over any limits when you decide how much money to put into an RESP.
14. Where can I find out more about RESPs?
- Check out the Registered Education Savings Plan booklet.
- Call 1 800 O-Canada (1-800-622-6232) to order a free copy.
- If you use a TTY, call 1-800-926-9105.
- Visit a Service Canada Centre near you.