Registered Education Savings Plan (RESP)

A RESP is a tax deferral plan that enables you to shelter investment income while saving for the post-secondary education of a beneficiary. Contributions to an RESP are not deductible against your income tax however the accumulated earnings on the investment are tax-sheltered.

The features of the RESP include:

  • With the help of a RESP a parent, friend or family member can start putting aside money for a child’s post-secondary education
  • The child must have a valid Social Insurance Number (SIN) before they can be a beneficiary of an RESP
  • You can deposit up to $50,000 for each child (named in one or more RESPs)
  • A Family Plan is ideal for families with one or more child:
    • Can name one or more children as beneficiaries
    • The children must be related to the subscriber (contributor) - their own children, adopted children - grandchildren, brothers or sisters
    • If any beneficiary does not pursue post-secondary education the remaining beneficiaries may use those funds for their educational purposes
  • A Single Plan is ideal for a member wanting to open an RESP for themselves or a non-related child:
    • Can only have one beneficiary
    • The beneficiary doesn't have to be a relative
    • There are no age limits
    • Anyone can open a Single Plan for any beneficiary however the Canada Education Savings Grant is only for children aged 17 or younger
    • If the beneficiary decides not to continue with their education after high school the subscriber will not be taxed on the amount they contributed to the RESP but they will have to pay taxes on the income earned in the plan
    • If the subscriber has contribution room in their RRSP they may make a tax free transfer of the accumulated interest to their own RRSP or their Spousal RRSP up to $50,000

The benefits of the RESP are:

  • You can use the plan to save for your children’s education over a period of years making contributions that suit your budget
  • Money from the Government of Canada (Canada Education Savings Grant or Canada Learning Bond) may be available to help you start saving early for the post-secondary education of your children or other beneficiaries
  • The income earned on RESP investments is tax sheltered until you withdraw the funds
  • Although RESP contributions are not tax-deductible they do allow savings to compound and grow tax-free until the child is ready to go to post-secondary education
  • The Credit Union Deposit Insurance Corporation of British Columbia, a statutory corporation, fully guarantees all deposits
 

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