Registered Education Savings Plan (RESP)
Setting up a Registered Education Savings Plan (RESP) enables you
to contribute money over a period of time on behalf of a beneficiary
with the goal of financing a post-secondary education.
Setting up a RESP
You can choose an individual or family plan, depending on the number
of beneficiaries you want to designate. Individual plans allow for
only one beneficiary. Family plans can have multiple beneficiaries
and provide the flexibility to move invested funds around based
on the educational needs of the chosen beneficiaries.
How it Works
The lifetime maximum contribution amount per beneficiary is $50,000. In addition, you can earn a 20% grant (Canada Education Savings Grant) on the annual contribution of up to $2,500 per year to a lifetime maximum of $7,200. This amount is automatically added to the RESP on your behalf on a quarterly basis.
Once you begin contributing to your RESP, all capital appreciation
including interest, dividends and capital gains grows on a tax-deferred
basis. Contributions are not tax-deductible, but your investment
can grow without any income tax liability until the beneficiary
begins to receive educational assistance payments (EAP). Most plans
allow a return of your contributions at any time, however, there
may be tax implications if you withdraw the growth from the RESP.
Financing Education
When the beneficiary enrolls as a full-time student in a qualifying
post-secondary education program, you can begin to withdraw money
in the form of educational assistance payments (EAP). Spreading
payment over the number of years a student is enrolled in school
minimizes the income tax payable. If the beneficiary decides not
to continue with his/her studies, you can choose to:
- Share accumulated funds with other beneficiaries (for family plans)
- Designate a new beneficiary
- Withdraw your contributions
A New Approach to Education Savings
RBC Asset Management has introduced the RBC Target
2015, 2020 and 2025
Education Funds to help you save for your children's education.
Each RBC Target Education Fund is aligned directly with a child's
anticipated post-secondary education start date. The key advantage
of these funds is an asset mix that evolves over time from growth-oriented
investments to more conservative. You receive investments that provide
growth potential up front to help cover the rising costs of education.
As the target date approaches, each RBC Target Education Fund becomes
more conservative, with less volatility and potential for negative
surprises.
For more information on RESPs, visit the RBC
Royal Bank site or consult with your advisor.
Learn more about the RBC
Target Education Funds and our entire family of RBC
Funds or explore the options to invest
now.
To learn more about registered investing see below:
