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RESP: Frequently Asked Questions (FAQ)


The RESP is a "Registered Education Savings Program" and is a popular tool for saving on education. The idea of ​​an RESP is that you will contribute money to your account, and the government will contribute 20% of the amount you place up to $ 500 a year. There are additional subsidies available, but conditions are based on lower incomes. Another reason why an RESP could benefit is that the income incurred in the account will increase the tax free until it is revoked. This happens when the child goes to school, usually 18 to 20 years after the child is born. There is a limit to what you can put in – $ 50,000 per child per child, and the government will only lose about $ 7,200 for benefits. The amount of money that the government gives you is called the Canada Education Savings Improvement Program (CESG). The registrant or contributor is the contributor to the RESP and the beneficiary is the beneficiary of the benefit or money. If I do not make an annual contribution

You can catch up to your contribution of up to $ 1000 in grants per year.

You can contribute any amount at any time as long as the remaining amount is less than $ 50,000.

Children may waste money

To withdraw money The child must have proof of first withdrawal into a qualified school (college, university and specialized schools such as a business school). After that, money can be retrieved whenever needed for books and other school expenses. In addition, parents must request removal from educational institutions and must be prepared to withdraw from contributions or income for tax purposes.

What if I have more younger

You can start a second RESP or transfer the first RESP to your second child if they use the funds instead of the oldest child. Transitions between children can be made with any kind of RESP account. The second child must be the beneficiary of the RESP before they can access the funds.

What if my child is not attending school?

There are several options. The first is to keep the RESP in case your child changes his mind. You can keep an RESP for 36 years after the start. Money can be transferred to another child if you have more than one. Any donated money can be retrieved by the contributor without penalty. CESG's grants will be returned to the government. All generated income is taxed at your income tax at the time of withdrawal plus 20%. You can transfer this money into RRSP if you have RRSP. Switch to RRSP

If you know the fact that your child will not go to school after high school, you should stop contributing to your RRSP about 3 to 4 years before this date. To allow the RRSP department to build. If you do so, any funds not used for education may be transferred to RRSP without penalty. Government subsidies will be levied, but you will save income tax before your child goes to school. The current penalty is a 20% income tax created, which can be quite a lot of money. There is still plenty of time to plan this and be aware once your child reaches adolescence.

Does my child have to study full time?


Is it a college or university or any type of geometry? It may also be a college or university. As a business school, CEGEP (Quebec Province) or any other organization approved by the provincial authority under the Lending Act.

Of Canadian students, the Canadian Financial Aid Act, the Quebec Financial Aid Act, an organization developed by the Federal Ministry of Agriculture, or a school outside of Canada. Refer to the "Canlearn.ca" web site for more details

What kind of account do I need and where can I open it?

There are two main types of accounts, a combined account or self-directed RESP and RESP groups. Group plans tend to be more limited so self-directed account type is one of the recommendations. This type of account can be opened at any bank or organization. There are also family plans and personal plans. There is not much difference between these plans on what you can do or not do. To request a self RESP, ask about a plan that allows you to buy individual stocks and Trade Exchange Funds (ETFs).

What can I invest in?

Any investment that may be held by the Organization in other registered accounts may also be held in an RESP. This includes, cash, bonds, stocks, mutual funds, exchange speculation funds (ETFs) and other securities traded on the exchange or on the market. The restriction will depend on the type of RESP account you have and where it is located. Need advice on time and capital withdrawal time, risk tolerance, comfort level, and knowledge of investments, as well as account fees and restrictions

Yes What are the rules when I take money out?


The amount paid inside the RESP is divided into two parts: the money that has been donated (or post-secondary support) and government-imposed money or as a result of the increase. Money in the plan (Education Grant). The rule is that if you donate money, there is no tax for it and no limit when it is given.

During the first 13 weeks of the school year, you can only withdraw $ 5,000 that you did not contribute. Then you can withdraw many of these kinds of money without limits. It is advisable to take other people's money before collecting donations in case your child does not finish school. If there are funds left in the RESP and no child can use it, the grant will be returned to the government.

Can I use an RESP as an adult? Yes, by opening a personal non-family RESP and naming both the registrant and the beneficiary, you can contribute up to $ 50,000 throughout the plan. This attraction lies in the fact that you qualify for the EAP regardless of whether you attend or pass the class, and the corresponding classes are eligible. Although the Adult RESP does not qualify for the Education Savings Grant Program, it may be one of the few investments that allow assets to develop on a tax-pay basis, particularly at a cost. Treatment if you do not have any RRSP or TAX Duty Account (TFSA)

Source by Joe Barbieri

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