RESP - Registered Educational Savings Plan

RESPs are a way to save for your child's education. The government of Canada provides a 20% matching grant for monies deposited to an Educational Savings Plan -- up to a maximum amount. The funds can only be used for Educational purposes.

If your child decides not to attend a post-secondary institution, the account can only be rolled over into the subscriber’s own, RRSP - if there is room. The 20% grant must be paid back to the government.

There is no Tax deferral with these accounts - interest income is taxed to the subscriber and capital gains are Taxed to the beneficiary - the student, once the student begins to withdraw the funds.

You have two choices when setting up a RESP - a family plan and an individual plan. If you have a single child an individual plan is fine.

If you have more than one child - use a family plan. It is much more flexible when dealing with more than one child.

Case Study

All 3 children have different needs and expenses, So you would not want have 3 equal RESPs. Equal is not always fair. With a family plan you can adjust the withdrawals to suit the child and their needs

Remember kids can change their minds just as quick as you please. Keep it flexible!

“What to WATCH OUT for:”

“Scholarship Plans”

• If your child chooses a 2 year community college, you will receive -- in the first year -- your initial investment back. In the second year only a small portion of the total amount in the account. The remainder is kept by the plan!

• If your child were to die before accessing the account-only your initial investment is returned to you. The rest is kept by the plan!

• If you must access the funds early-before maturity date - because the government has eliminated grade 13. You will only receive back a small portion of your original investment. The rest is kept by the plan!

The Companies offering these plans have been investigated multiple times for "unethical sales practices" So watch out when dealing with them--they can very tricky!!!

There is NO flexibility in these plans.

"And nothing to recommend!"

How much you can contribute to any RESP and receive the grant for; is complicated by:

• the number of children
• their ages
• how far back you can go

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