What is an RESP?

A Registered Education Savings Plan (RESP) is a government program that helps parents save for their child’s post-secondary education. Contributions you make to an RESP accumulate and grow tax free over the life of the plan, and can be used to pay for a variety of programs in Canada and abroad.

Why start an RESP?

Given that almost 70% of new jobs require some education after high school, starting a savings plan now gives children more options for the future. When your child enrols in a qualifying educational program and starts receiving the funds, they will be responsible for taxes, but only on the growth and grant portions of the plan. Because students generally report a low level of income while in school, the amount of tax should be minimal.

Flexibility and control

With The Co-operators Versatile Portfolios RESPs, you have a choice of two plan options: an Individual plan for one child or a Family plan for two or more children. Your Financial Advisor can help you select the education savings vehicle most suited to your goals and investment risk, from a range of portfolios that offer various degrees of risk and potential return, including socially responsible investments.

With plans to suit every budget, you can open an RESP for as little as $50 per month with complete control over how much you contribute each year, up to a lifetime maximum of $50,000 per child. In addition, RESP segregated funds guarantee 75% of your principal investment upon maturity or death, unlike mutual funds from the banks that generally have no guarantees at all.

If your child decides not to continue their education after high school, you have several options:

  • Name another beneficiary, such as the child’s brother or sister.
  • Transfer the RESP earnings to your RRSP if you have the available room. 
  • Keep the plan intact in case your child decides to start school later. You can keep an RESP account open for up to 36 years.

Access to government grants

Along with tax-deferred savings, the Government of Canada also offers additional savings incentives. RESP contributions may qualify for the Canada Education Savings Grant (CESG). Through the CESG, the federal government will contribute an additional 20% of your annual RESP contribution to a maximum of $500 per child per year. In addition to the CESG, you may also qualify for the Canada Learning Bond or the Alberta Centennial Education Savings Plan Grant.

The right choice for your child’s future

The Co-operators has a long history of providing financial security to Canadians. We can help you invest for your child’s needs, from RESPs to starting RRSP funds for their retirement. To find out more about investing in your child’s future, contact your local Co-operators Financial Advisor.