A Registered Education Savings Plan (RESP) is a way for you to save money for your child’s education. You contribute money, and when your child starts post secondary education they can draw out the money. The student pays tax on the withdrawals, but since they are in a low tax bracket (because they are a student), they often pay little or no tax.
You can open a RESP at your bank, or investment advisor.
Should I Use an RESP?
- You have a child and you want to save money for their future education.
- NOTE: The government limits how much you can contribute each year to an RESP. You do not get a tax deduction for contributions, and in most cases the student pays tax on the withdrawals.