Give the gift of an RESP

During the holiday season, there is pressure to shop for gifts that bring joy today. But sometimes the meaningful presents are the ones that last—like an investment in your loved one’s future.

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One of the best gifts you could give a younger relative, whether it be your child, grandchild, or someone else, could be an investment in their future: a Registered Education Savings Plan (RESP).

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What is an RESP?

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Registered Education Savings Plans are designed to help save for a child’s post-secondary education. Funds withdrawn from an RESP can be used by the student, or beneficiary, to pay for tuition and costs like textbooks or equipment. Savings in an RESP are tax-free, and they can hold both savings and investments.

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There are three types: individual, family, and group plans. These vary in how you contribute and what fees they may involve.

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RESPs can be open for up to 36 years, so the funds can be used beyond college or university for continuing education.

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You can add to an RESP through your own contributions, or through government assistance programs: the Canadian Education Savings Grant and the Canada Learning Bond.

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How do I open an RESP?

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Opening an RESP is relatively straightforward, but there are a few things to keep in mind. You will need to:

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• Have your social insurance numbers ready: yours and the beneficiary’s. Note: you and your beneficiary must both be Canadian residents.
• Choose the RESP plan that suits you: individual, family, or group plan.
• Figure out how to invest your savings e.g. in savings accounts or GICs. You may consider opening a self-directed RESP, where you can choose more than one kind of investment.
• Check how much the plan might cost. There might be setup fees, sales fees, or annual fees, and potential penalties if you want to make changes.
• Do your research. Make sure you read everything before you sign the contract. If you change your mind after signing, you do have the right to withdraw your money within 60 days, minus fees, but best to only sign when you’re sure.
• Finally, open your RESP! Your RESP provider will apply for the government grants on your behalf. The federal government will contribute to your RESP savings annually through the Canada Education Savings Grant, and lower-income families may qualify for the Canada Learning Bond.

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It can be a group gift!

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Your RESP will grow more quickly if more people contribute! Go in with a few family members to add to the fund and make the gift even more meaningful.

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If you want to receive government grants for the year, the annual contribution deadline for an RESP is December 31, so mid-December would be a great time to get it going!

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Keep in mind, the contributions don’t need to come in at one time — add more as you go for birthdays or other special occasions, if you so desire!

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We can help

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Book a meeting to discuss RESP options today!

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