RESP
A Registered Education Savings Plan (RESP) is one of the best ways to save for a child’s education. The earlier you start investing in one, the more time your money has to grow to cover education costs later.
Earnings in your RESP are tax-sheltered, helping you save even more- The money in an RESP can be used for various education costs – not just tuition
- You have the potential to earn grants from the government to help boost your savings
Limited-time offer:
Get up to $100† bonus when you start a savings habit in a BMO RESP.
Why invest in an RESP?
Tax-sheltered earnings
Your earnings are all tax-sheltered – and when withdrawn the earnings are taxed to the child – who may pay little to no taxes on them as students.
Not just for tuition
The money can be used towards more than just tuition costs – including books, living expenses, other course materials and more.
Potential for grants
The federal government may add up to a maximum of $500/year with the Canada Education Savings Grant (CESG), up to a lifetime maximum of $7200.
Other grants include CLB and provincial grants.
RESPs by the numbers
$60,000:
Average cost of a 4-year university degree.
$100,000:
Estimated cost of a 4-year degree by 2021.
31:
Number of years contributions may be made after plan is set up. This can increase to 35 years if the beneficiary is eligible for the disability tax credit.
How to make the most of your RESP
Here are a few ways to make sure you’re enjoying the most of what an RESP has to offer.
Make sure you have the right investments
Make sure the investments you hold in RESP align with your risk tolerance and investment horizon. You can start with long-term investments when your child is young and switch to safer options as they approach post-secondary age.
Max out contributions
The good news is there’s no annual contribution limit for RESPs. However, there is a lifetime limit of $50,000. Take advantage of the RESP’s benefits and contribute up to the lifetime limit.
Open an account early
Your child may still be young, but it’s never too early to plan for their future. The earlier you start contributing to your RESP the more time your money has to grow. For easy savings, check out our Continuous Savings Plan.
Take advantage of our savings account rates
On top of everything else an RESP can do for you, here’s another great reason: Great rates to help you make real financial progress right from the start. It’s easy to get started today.
Investments you can hold in your RESP account
Guaranteed investment certificates protect your initial investment, so you’ll get that investment back at the end of the set term. Plus, you can count on a guaranteed rate of return, depending on the GIC you pick.
Pro tip: Market-linked GICs offer higher return potential than traditional Guaranteed Investment Certificates.
Ways to Invest:
- With a BMO professional
- Online with BMO Self-Directed and adviceDirect
Bonds are a fixed-income investment, meaning they provide a set interest payment on a regular schedule to investors allowing you to invest with a predictable return.
Ways to Invest:
- With a BMO professional
- Online with BMO Self-Directed and adviceDirect
We have a comprehensive selection of professionally managed mutual funds that can be a great fit in your account. Design the portfolio that works for your goals and how much risk you’re comfortable with.
Ways to Invest:
- With a BMO professional
- Online with BMO Self-Directed and adviceDirect
Exchange traded funds, like stocks, can be traded on financial exchanges. ETFs up of several assets, similar to a mutual fund– making them a diverse investment option.
Ways to Invest:
- With a BMO professional
- Online with BMO Self-Directed, adviceDirect and SmartFolio
Stocks – or equities as they’re also known - are shares of ownership in a company. These investments allow your money to grow as the company grows – either through stock price increases or shared earnings like dividends.
Ways to Invest:
- Online with BMO Self-Directed and adviceDirect
Did you know?
There are other financing options that can lend a helping hand, including:
- BMO Bank of Montreal Student Line of Credit Students can help pay for their own education.
- Homeowner’s Line of Credit you can use the equity in your home to help with education expenses – scholarships, grants and bursaries can be a big bonus.
- Federal and provincial governments will lend your child money to go to school.
- Other incentives available for qualified families include the Canada Learning Bond (CLB), British Columbia Training and Education Savings Grant (BCTESG), and Quebec Education Savings Incentive (QESI).
RESP calculator
How much should you be saving for your child’s education? Try our RESP calculator to start building your plan.
Learn more about investing in RESP with BMO
An RESP with SmartFolio can help you save for your child’s future
See how SmartFolio can make growing your RESP easier.
When to use RRSPs, TFSAs and RESPs
Registered accounts may seem similar, but they serve different purposes. Read about how these accounts can benefit you most.
Invest like a pro
Find out how to make your savings work harder though you by investing.
RESP FAQs
General questions
A Registered Education Savings Plan (RESP) is a tax-sheltered plan you can use to save for a child’s education. It lets you enjoy tax-sheltered investment growth, plus you’ll also be eligible for government grants — so it can make a big difference over time!
The biggest benefits of an RESP are tax-sheltered investment growth and government grants. You don’t pay any tax on money your investment earns while it stays in the plan, and when money comes out of an RESP it’s taxed at the beneficiary’s tax rate, which will probably be quite low. The federal government may also top up your annual contribution, up to $500 a year or more, through the Canada Education Savings Grant (CESG). You may also be eligible for the Canada Learning Bond (CLB), and additional provincial grants if you live in Quebec or British Columbia.
Not until it’s taken out. Investment earnings grow tax-sheltered in the RESP. Then when it’s withdrawn by the student, it’s taxed based on their income, which usually means the tax rate is quite low. Also note that when your investments are redeemed, the incentives are also taxed.
Unfortunately, no — unlike an RRSP, RESP contributions are not tax-deductible.
To open an RESP, visit your local BMO Bank of Montreal branch, or book an appointment online. When you come in, be sure to bring your Social Insurance Number, the Social Insurance Number of the child or beneficiary, a piece of government I.D. and your banking information. A BMO investment professional will be happy to take you through the process and answer all your questions.
Good news — there’s no annual limit to RESP contributions. The lifetime contribution limit for any one beneficiary is $50,000. CESG grants, CLBs and payments from provincial programs don’t count toward this limit.
Government contributions can make a big difference to your RESP. The maximum annual CESG contribution is $500 (basic), or $600 (basic plus additional) for lower and middle-income families. The most a beneficiary can qualify for in their lifetime is $7,200. CLB contributions may be as much as $500 for the first year and $100 for each following year until the child turns 15, to a maximum of $2,000. Additional provincial grants may be available in Quebec and British Columbia.
RESP Beneficiaries
Good question! The beneficiary is the person who the RESP is set up for (the one who will be going to school), and the subscriber is the person who sets up the RESP and starts making contributions to it.
If you have a family plan, you can contribute up until the beneficiary turns 31. For individual plans, contributions can be made up to 31 years from when the plan was started, regardless of the beneficiary’s age.
No, you can set up an Individual Plan for just about anyone — they don’t have to be related to you. But, if you set up a family plan, all the beneficiaries must be related to you by blood or adoption.
Any resident of Canada with a Social Insurance Number can be the beneficiary of an RESP. Individual plans have no age restrictions, and the beneficiary doesn’t have to be related to you. You can even open an RESP for yourself. If you have (or plan to have) more than one child, you can open a family plan. All beneficiaries of a family plan must be related to you, though.
If the beneficiary of an RESP doesn’t end up going to school, the best option would be to transfer the RESP to another beneficiary. Lifetime limits on grants for an individual would still apply though, so any excess would have to be returned to the government.
If there are no other eligible beneficiaries, and the plan is collapsed, all grant money must be repaid. Your original contributions can be withdrawn without taxation or penalties, but any earned income will be taxed and subject to an additional 20% penalty. You can also transfer up to $50,000 from an RESP into an RRSP if you have contribution room available.
Yes, in the following situations:
- The replacement beneficiary is under the age of 21 and is a sibling of the original beneficiary.
- Both the original and replacement beneficiaries are under 21 and are related by blood or adoption to the original subscriber(s) of the RESP.
Bonds and grants
The Canada Learning Bond (CLB) is a contribution the government makes to RESPs for children from lower and middle-income families. Unlike CESG grants, eligibility for the CLB isn’t tied to individual contribution amounts. In fact, a child can get the CLB even if no other contributions have been made to the plan.
Yes. You can carry CESG grants forward for as long as the beneficiary is eligible. The beneficiary can only catch-up for one prior year at the time. That means they can carry forward the current year’s max of $500, plus one of the previous year’s $500 amount, to a maximum of $1,000 per year.
The Basic CESG amount is 20% of the first $2,500 that you contribute to the plan in a year, i.e. or $500. The Additional CESG is a supplement available to children of lower and middle -income families, which can be up to $100 a year.
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- This material is for informational purposes only. This material is not intended to be relied upon as research, investment, or tax advice and is not an implied or express recommendation, offer or solicitation to buy or sell any security or to adopt any particular investment or portfolio strategy. Any views and opinions expressed do not take into account the particular investment objectives, needs, restrictions and circumstances of a specific investor and, thus, should not be used as the basis of any specific investment recommendation. Investors should consult a financial advisor and/or tax information applicable to their specific situation.
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