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Registered Education Savings Plan (RESP)

Frequently asked questions

  • What’s an RESP?
    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!
  • Who is the beneficiary and who is the subscriber?
    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.
  • What are the benefits of an RESP?
    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.
  • What’s the age limit of an RESP beneficiary?
    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.
  • Does the beneficiary have to be my child?
    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.
  • Can CESG grants be carried forward?
    Yes. You can carry CESG grants forward for one year, to a maximum of $1,000 per year.
  • What’s the difference between the Basic and Additional CESG?
    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.
  • What’s a Canada Learning Bond?
    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.
  • What’s the maximum RESP contribution?
    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.
  • How much does the government contribute to an RESP?
    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.
  • Is RESP income taxable?
    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.
  • Are RESP contributions tax-deductible?
    Unfortunately, no — unlike an RRSP, RESP contributions are not tax-deductible.
  • How do I open an RESP?
    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.
  • Who can be the beneficiary of an RESP?
    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.
  • What if the beneficiary doesn’t end up going to school?
    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.

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