What is an RESP? 

A Registered Education Savings Plan (RESP) is a type of savings account registered with the Canada Revenue Agency and is designed to help you save for your child’s future education. You can save a lifetime maximum of $50,000 for each child or grandchild. A one percent penalty per month will be applied on any over-contributed amount to the RESP. 

Why an RESP? 

Although money put into an RESP is not tax deductible, any contributions to the plan grow tax-free. The longer money is in an RESP, the more time it has to generate interest revenue. When the money is taken out by the child, the withdrawal of the RESP growth is taxable to their income, not the contributor’s income. Because most post-secondary students have a small income, they will be taxed at a lower rate.  

One of the biggest advantages to an RESP is that up until your child turns 15, your first $2,500 put toward the plan each year is eligible to be matched, up to 20% through the Canada Education Savings Grant.  

Through an RESP, there is also an additional incentive of up to $2,000 to help low-income families start saving early for their child’s post-secondary education. You are not required to make personal contributions to receive the Canada Learning Bond. This Canada Learning Bond is available for children who are born in 2004 or later.  

What is the deadline? 

The RESP contribution deadline is December 31st. This means that this is the last date to put money into the RESP in 2025. Because yearly contributions can be matched up to 20%, it is important to plan your contributions within the calendar year. 

If you can’t make a $2,500 lump sum contribution (you are not alone!) but still want to save for your child’s post-secondary education, you can talk to a Financial Service Officers who can help you set up a small regular contribution that will work for you. Book an appointment to prepare for your child’s financial future by texting us at 1-855-728-2211 or calling your nearest branch.