Registered Education Savings Plan - Frequently Asked Questions
- How will the Government of Canada help me save?
- Can one child be the beneficiary of more than one RESP?
- What about taxes? Do I get a tax deduction?
- When can I withdraw the money earned in my RESP?
- How can I find out more?
1. What is a Registered Education Savings Plan?
A Registered Education Savings Plan (RESP) is a special savings plan in which money grows tax free until it is withdrawn for education after high school. Contributions to an RESP are made by a subscriber, on behalf of one or more beneficiaries named in the plan.
2. Can I open an RESP for myself?
Yes. There are no age limits for opening an RESP. You can open a plan to save for a child, or you can name yourself or another adult as the beneficiary of your plan. However, adults are not eligible for the Canada Education Savings Grant (CESG) or the Canada Learning Bond (CLB).
3. How will the Government of Canada help me save?
The Government of Canada has special grant programs to help you save. Because it believes in the value of education as an investment in the future, the Government of Canada will increase the amount you put aside for a child’s education with:
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a Canada Education Savings Grant (CESG) that is 20% - 30% - or 40% added to the money you put into an RESP – depending on your family net income; and
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a Canada Learning Bond (CLB), an additional grant worth up to $2,000 to help modest-income families start saving for the education after high school of children born after December 31, 2003.
4. Why should I open an RESP?
An RESP is a good way to save because:
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Your money grows tax free until it is withdrawn for education after high school.
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Having an RESP for a child allows you to apply for special education savings incentives, such as the Canada Education Savings Grant and the Canada Learning Bond provided by the Government of Canada to help you save. If you live in Alberta, you may also be eligible for the Alberta Centennial Education Savings Grant.
5. When should I open an RESP?
The earlier you open an RESP, the sooner your savings will grow. If you have named a child as a beneficiary, your savings will grow even more, if you apply for the Canada Education Savings Grant and the Canada Learning Bond as soon as possible.
6. Where can I open an RESP?
You can open an RESP through an RESP provider. RESP providers include most financial institutions, such as banks or credit unions, as well as group plan dealers or financial services providers. It is wise to shop around to find the RESP provider that can best meet your needs.
7. Do I need a bank account to open an RESP?
No. You can open an RESP without having a bank account.
8. What do I need to open an RESP?
To open an RESP, you need a social insurance number (SIN) for yourself and for each beneficiary. In order to apply for a SIN you must first have a birth certificate for each beneficiary.
9. How do I get a birth certificate?
Birth certificates are issued by the province or territory in which a child was born. You should contact the government of the province or territory where the beneficiary was born for details on how to get a birth certificate.
10. How do I get a Social Insurance Number?
Social Insurance Numbers (SINs) are issued by the Government of Canada.
There is no cost to get a SIN. To get a SIN for yourself or your child or for more information:
- Visit your local Service Canada Centre or Human Resources Canada Centre (HRCC);
- Call 1-800-O-Canada (1-800-622-6232); or
- Read our Social Insurance Number Overview
11. How do I decide what type of RESP to open?
You can choose from three general types of plans: family plans, individual plans, or group plans. Your RESP provider will provide you with information to help you choose the one that is best for you.
For example, if you are saving for more than one child, you can choose to have a family RESP. When you have a family plan, all investments for the children are combined. If there are large differences between the ages of the children, however, you may wish to open separate plans for each child. Before deciding on a plan, you should discuss your choices with your RESP provider.
12. Do I have to put money into an RESP?
No. If you qualify, you can get a Canada Learning Bond without putting any money in your RESP. Otherwise, the amount you put into an RESP depends on your plan and the amount you choose to invest. Some plans have minimum deposit requirements, while others do not.
13. Are there limits on the amount of money that can be put into an RESP?
Yes. There are annual and lifetime limits on the amount that can be contributed to RESPs. For each beneficiary, the annual limit for contributions to all RESPs is $4,000 and the lifetime limit is $42,000. The amount of money you put into your RESP depends on your specific plan and the amount you choose to invest, up to these limits.
14. Can one child be the beneficiary of more than one RESP?
Yes. One child can be named as the beneficiary of more than one RESP. However, there are annual and lifetime limits to the amount of money that can be contributed for each child. When deciding how much money to put into an RESP, it is important to ask whether others are also making contributions to a plan for that child and make sure you do not go over those limits.
15. How often do I have to put money into an RESP?
Every RESP is different. Some RESPs require monthly contributions. Others let you put as much money as you want into your RESP up to the RESP limits, whenever you want. Your RESP provider can give you more details about how often you must put money into the plan.
16. What about taxes? Do I get a tax deduction?
Your money grows tax-free while it is in your RESP. You do not get a tax deduction for the money you put into an RESP, but the money your investment earns while it is in the RESP is not subject to tax until you close your RESP, or until money is taken out to pay for the education of a child named in your plan as a beneficiary:
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When you close your RESP, you may be able to reduce the taxes you have to pay by transferring your accumulated income payment to a Registered Retirement Savings Plan (RRSP).
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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.
17. How long can I contribute to an RESP?
The length of time you can contribute to an RESP depends on your type of plan and the age of your beneficiary:
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If you have a family plan, contributions must stop before your beneficiary turns 21 years of age.
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If you have an individual plan, depending on the terms of the plan you may be able to put money in your RESP up to and including the 22nd year of your RESP’s existence.
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In a group plan, the length of time you can contribute will depend on the terms of the plan. Talk to an RESP provider that offers group plans for more details.
Note: RESPs can stay open a maximum of 26 years.
18. What happens when a beneficiary is ready to continue education after high school?
As soon as a child named in the plan is enrolled in a qualifying educational program, he or she can start receiving money from the RESP. Your RESP provider will make sure that educational assistance payments (EAP) from your RESP are made according to the terms of the plan. EAPs are taken from the income your money made while it was invested in your plan and any government grants, such as the CESG or CLB.
19. What is a qualifying educational program?
Usually, a qualifying educational program is a course of study that lasts at least three weeks in a row, with at least 10 hours of instruction or work each week. A program at a foreign educational institution must last at least 13 weeks.
Qualifying educational programs include apprenticeships, and programs offered by a trade school, CEGEP, college or university. They may also be offered by other institutions certified by the Minister of Human Resources and Skills Development.
Note: To find out more about qualifying educational programs contact the Canada Revenue Agency toll-free at 1-800-959-8281.
20. Is there a limit to the amount of the Educational Assistance Payments a beneficiary can receive?
Yes. A beneficiary can only receive up to $5,000 in educational assistance payments (EAPs) before he or she completes 13 weeks in a row of a qualifying educational program. Once this period is over, the beneficiary can get any amount of EAPs. Students requiring more than $5,000 in EAPs during the first 13 weeks of enrolment may apply to Human Resources and Skills Development Canada (HRSDC) for permission to receive a larger amount.
Remember that EAPs only include income and grant. You can withdraw any amount of your own savings to pay for a child’s education. In addition, the terms of your specific RESP may also limit the amount of the EAPs your beneficiary can receive. You should ask your RESP provider for further information.
21. What should I do when a beneficiary chooses not to continue education after high school?
If a child named in the RESP decides not to continue education after high school, you may be able to:
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Wait for a period of time, he or she may decide to continue studying later;
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Use the money for a brother or sister who does continue education after high school;
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Transfer the money into a Registered Retirement Savings Plan (RRSP) to help you save for your retirement.
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Withdraw the money.
Note: Check with your RESP provider to find out about your choices if your beneficiary does not continue education after high school.
22. What happens to the Government of Canada money in my RESP when my beneficiary does not continue to education after high school?
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When it is clear that a beneficiary is not going to continue education after high school, any money in that child’s RESP from a Canada Education Savings Grant must be returned to the Government of Canada or, under certain conditions, may be used for a brother or sister’s education; but
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Money from a Canada Learning Bond must be returned to the Government of Canada. The Canada Learning Bond cannot be used by another child.
You can withdraw your personal savings tax free.
23. What happens when I withdraw my money from my RESP?
You, as a subscriber, can withdraw your money at any time, however, there may be an impact on the grant you have received. If contributions are withdrawn from an RESP that contains the CESG, and no beneficiary is enrolled in a qualifying educational program and eligible to receive an educational assistance payment, you may have to return all of the CESG to the Government of Canada.
24. When can I withdraw the money earned in my RESP?
You may withdraw the income earned in the RESP if:
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all the children named in the plan are at least 21 years old and are not eligible for an educational assistance payment (EAP); and
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you are a Canadian resident; and
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you opened the RESP at least 10 years ago.
The income you withdraw from the plan is called an accumulated income payment (AIP). It will be taxed at your regular income tax level, plus an additional 20 percent. You will not be taxed on the amount you contributed to the RESP, but you will have to pay taxes on the money you earned in your plan as interest. In some cases, you may be able to reduce or eliminate these taxes by using some or all of your accumulated income to make a contribution to a Registered Retirement Savings Plan (RRSP). For further details contact the Canada Revenue Agency toll-free at 1-800-959-8281.
Note: Check with your RESP provider to find out more about your choices.
25. How can I find out more?
Getting more information is as easy as picking up the telephone or following the provided links below.
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Education savings plans are registered by Canada Revenue Agency to allow your savings to grow tax free. For more information about taxes and RESPs please dial 1-800-959-8281
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The Government of Canada helps your savings grow with grants provided through Human Resources and Skills Development Canada (HRSDC). For more information about the Canada Education Savings Grant and the Canada Learning Bond, contact the Canada Education Savings Program by E-mail or call 1-888-276-3624 toll free.
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For information about the Alberta Centennial Education Savings Plan, visit its website or call 310-4455 toll-free in Alberta.
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For more information about RESP providers, see our list of RESP providers.