What Is the Maximum Government Contribution to an RESP?
The Canadian government contributes up to $7,200 in CESG funds per child. Families with low incomes may qualify for additional contributions through the CLB.
What Happens If My Child Does Not Pursue Post-Secondary Education?
If the beneficiary does not attend a qualifying educational program, you can transfer the RESP savings to another beneficiary, withdraw the funds (with applicable taxes), or move the earnings into an RRSP (if eligible).
How Much Should I Contribute to an RESP?
Contributions depend on your financial situation and education savings goals. Regular contributions up to $2,500 annually can help you maximize CESG grants.
Are RESP Withdrawals Taxed?
While the original contributions are tax-free, earnings and government grants are taxed in the beneficiary’s name. Since students typically have lower incomes, they often pay little to no tax on withdrawals.
When Should I Start an RESP?
The earlier you start, the better! Starting an RESP when your child is young allows more time for your contributions to grow and take full advantage of government grants.
Can I Open an RESP for Myself?
Yes, RESPs are not restricted to minors. Adults planning to return to school can also open an RESP to save for their education.
What Can RESP Funds Be Used For?
RESP funds can cover a range of post-secondary education expenses, including tuition, books, housing, transportation, and meal plans.
Is There a Limit to How Much I Can Contribute to an RESP?
The lifetime contribution limit is $50,000 per beneficiary. There is no annual limit, but only $2,500 in contributions per year qualifies for the CESG grant.
What Happens If I Stop Contributing to an RESP?
You can stop contributions at any time without penalties, and your funds will continue to grow tax-free until they are withdrawn or the plan matures.
Can I Change the Beneficiary of an RESP?
Yes, you can transfer the RESP to another beneficiary, provided they are under 21 and related to the original beneficiary.
