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RESP Basics

What is an RESP?

May 27, 2019

The acronym stands for Registered Education Savings Plan and is a type of registered account which is used for education savings. Funds that are contributed into the account are after-tax dollars, meaning you do not get a tax deduction when making a contribution. What you do receive is a 20% CESG or Canadian Education Saving Grant payment on the first $2,500 of contribution per beneficiary/child. If you miss a year, all is not lost. You can makeup contributions by adding an additional $2,500 per beneficiary per year the child is behind. For example, if your child is 4 years old and you have yet to make any contributions, you could contribute $5,000 per year for the next 3 years to make up for the years that you missed. You would receive $1,000 annually in CESG for each $5,000 contribution until the child is caught up. There is a lifetime limit of $7,200 CESG per beneficiary.

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