Investing in Their Future: The Benefits of an RESP

Whether you’re a parent thinking about your child’s future or a grandparent looking for a meaningful way to help, a Registered Education Savings Plan (RESP) can be one of the most valuable gifts you give.

An RESP helps you save for a child’s future education while taking advantage of both tax-sheltered growth and government support. Investments within the plan can grow without being taxed while they remain in the RESP. When investment income and government assistance are eventually withdrawn for education, they are generally taxable to the student, who is likely in a lower tax bracket.

One of the biggest advantages is the Canada Education Savings Grant (CESG). The basic CESG adds 20% to eligible contributions, up to $500 per year and a lifetime maximum of $7,200 per beneficiary. That means a $2,500 annual contribution could receive an additional $500 from the federal government. Some families may qualify for additional CESG amounts, and eligible lower-income families may also benefit from the Canada Learning Bond.

Starting early can make an important difference. Even modest contributions have more time to grow, and family members can contribute to the plan. An RESP can therefore be a practical way for parents and grandparents to work together toward a child’s future. The lifetime contribution limit is $50,000 per beneficiary.

RESP funds can help support qualified post-secondary education, training and apprenticeship programs, including eligible programs outside Canada.

At YCU, we believe saving for education doesn’t have to start with a large amount. What matters is getting started. Talk to us about how an RESP could help you give the children or grandchildren in your life a head start on whatever comes next.