With the rising costs of higher education, planning early is crucial. A Registered Education Savings Plan (RESP) is a dedicated account designed to help parents, grandparents, and guardians save for a child's post-secondary studies.
Government Grants
The biggest incentive for opening an RESP is the Canada Education Savings Grant (CESG). The government matches 20% of your annual contributions, up to a maximum of $500 per year, and a lifetime limit of $7,200 per child.
Tax-Deferred Growth
The money inside an RESP grows tax-free. When it's finally withdrawn for educational purposes, the growth and grant portions are taxed in the hands of the student—who typically pays little to no tax due to their low income. It's a win-win strategy for educational funding.