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Registered Education Savings Plan (RESP)


A Registered Education Savings Plan (RESP) is designed to help you save for post-secondary education for a child or grandchild (the beneficiary). It offers flexibility, tax-deferred income and investment growth. Plus, contributions are eligible for government grants.

 
 
Below are some commonly asked questions, and our answers, on RESPs.

For more information or to open an RESP, contact your local Meridian branch to set up an appointment. 

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Investment earnings are tax-sheltered (the RESP grows tax-free!) until the student withdraws funds to pay for his/her post-secondary education.

RESPs are flexible: you can choose a new beneficiary if your child does not pursue post-secondary education. 
 

Young people with education savings are 50% more likely to pursue post-secondary education. 
 

An RESP is one of the best ways to save for your child's education. The earlier you open one, the more time your money has to grow. 

FAQs


  • What do I need to bring to my appointment?
    In order to open an RESP, you'll need to bring the following documents to your appointment: 

    • Your Social Insurance Card
    • Your child's Social Insurance Card
    • Your child's Birth Certificate or Permanent Resident Card 

    If you are not the parent or legal guardian of a child, but would like to open an RESP for them, please call your local Meridian branch for more information on what documents you'll need to bring with you. 
  • What are the advantages of an RESP?
    By opening an RESP and making regular contributions, the beneficiary may qualify for government grants (free money!) such as the Canada Education Savings Grant, the Canada Learning Bond and provincial grants. The income earned within the plan is tax-sheltered until withdrawn. When funds are withdrawn by the student to help pay for his/her post-secondary education, he or she will likely have a low marginal tax rate.
  • How many years can I contribute to an RESP?
    For an individual plan, you can make contributions to an RESP for up to 31 years, following the year the RESP is opened (35 years for a beneficiary eligible for the Disability Tax Credit).
  • How much grant money is available?
    The amount of the grants received from federal and provincial governments will depend on a number of factors:

    • How much you contribute.
    • When you contribute — regular contributions beginning early in a beneficiary’s life will benefit from compounding growth on government grants
    • Where you live — not all provincial governments provide grants
    • Your family income (for Canada Learning Bond and additional CESG grant)
  • Canada Education Savings Grant (CESG)
    All children under the age of 18* who are residents in Canada automatically accumulate CESG contribution room. The Federal government contributes 20% on the first $2,500 deposited into an RESP each year until the beneficiary turns 17. The annual grant maximum is $500 per beneficiary, or $1,000 when the beneficiary has unused CESG contribution room. The lifetime CESG maximum is $7,200 per beneficiary.

    Some families are eligible for additional CESG on contributions, depending on family income.
  • Canada Learning Bond (CLB)
    The CLB is available to children born on or after January 1, 2004. Eligible beneficiaries receive an initial grant of $500 and subsequent grants of $100 per year of eligibility. An RESP must be opened to receive the CLB; however, there is no requirement to make contributions to the RESP to receive the CLB. Eligibility for the CLB is determined by the child’s family’s net income. The lifetime CLB maximum is $2,000 per beneficiary.
  • Who owns the funds in the RESP?
    The subscriber is the person who opens the RESP and is the registered owner of the plan. A plan can be opened by an individual—a parent, grandparent, family friend—or joint subscribers who are spouses —two parents or two grandparents, for example. 
  • Can I create one RESP for multiple beneficiaries?
    Yes, however you will need to set up a specific type of RESP called a Family Plan. There is a limit of one beneficiary per plan, except under a Family Plan, which provides for multiple beneficiaries. The beneficiaries of a Family Plan must be a sibling of every other beneficiary and must be related to the subscriber(s) by blood relationship or adoption (this includes step children and step grandchildren).
  • Which Post-Secondary Institutions qualify for EAPs?
    Most Canadian post-secondary institutions and programs, including correspondence courses, qualify for the purpose of receiving RESP Educational Assistance Payments. Certain foreign postsecondary institutions may also qualify.
  • What happens when a beneficiary pursues Post-Secondary Education?
    The subscriber can request educational assistance payments to cover expenses for the RESP beneficiary - such as tuition fees, textbooks, room and board - associated with attending a qualifying post-secondary educational program. These payments are taxable to the beneficiary at his or her marginal tax rate.
  • How many years does the beneficiary have to use the RESP funds?
    An RESP must be terminated by the end of the 35th year following the year the RESP was opened. The mandatory termination date for an RESP with a beneficiary eligible for the disability tax credit is the 40th year following the year the RESP was opened.
  • What happens if an RESP beneficiary does not pursue a Post-Secondary Education?
    If the beneficiary opts not to pursue post-secondary education, there are several options for the RESP.

    Note: Where an RESP has reached the mandatory termination date, #3 becomes the only option available.

    1) Change the plan beneficiary*.
    2) Transfer funds to another RESP*.
    3) Collapse the plan*.

    If you choose #3 you will have to return the unused government grants (i.e. CESG, CLB). The RESP contributions, which belong to the subscriber can be withdrawn without penalty.

    The following options are available for disbursement of income earned within the plan:
    • Transfer funds to the subscriber’s RRSP or to a spousal RRSP*
    • Withdraw the funds, subject to withholding tax*
    • Transfer funds to the Designated Educational Institution

    *Some restrictions and/or penalties may apply.

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