RESP Basics
What does RESP stand for?
Registered Education Savings Plan
What is the maximum lifetime contribution limit for an RESP?
$50,000
What types of investments can be held within an RESP?
Stocks, bonds, mutual funds, GICs (Guaranteed Investment Certificates), and ETFs (Exchange-Traded Funds).
What is the maximum duration an RESP can remain open?
An RESP can stay open for up to 36 years.
Who can open an RESP account?
Parents, Guardians, or Grandparents.
What is the maximum annual contribution limit that qualifies for the Canada Education Savings Grant (CESG)?
$2,500
True or False: Investments within an RESP can be changed without penalty.
True
Are there any age restrictions for beneficiaries to receive EAPs?
Yes, beneficiaries must be enrolled in a qualifying post-secondary education program before the age of 31 to receive EAPs.
To save for a child's post-secondary education.
What percentage of CESG does the government match on the first $500 contributed annually?
20%
What happens to investment income earned within an RESP?
It grows tax-free until withdrawn.
What happens to unused grant money in an RESP if the beneficiary does not pursue post-secondary education?
Unused grant money may have to be returned to the government, depending on the type of grant.
What are the two main types of RESPs?
Individual and Family.
What is the maximum CESG amount that can be received in a year?
$500
Can contributions to an RESP be withdrawn at any time?
Yes, contributions can be withdrawn tax-free at any time.
Can contributions be withdrawn from an RESP tax-free if the beneficiary does not pursue post-secondary education?
Yes, contributions can be withdrawn tax-free, but any associated grants and investment income may be subject to taxes and penalties.
How are contributions to an RESP taxed?
Contributions are made with after-tax dollars and grow tax-free until withdrawn.
What other government grants are available for RESPs, besides the CESG?
Canada Learning Bond (CLB)
What happens to investment income if it's withdrawn from an RESP for non-educational purposes?
It is subject to tax and may be subject to additional penalties.
What are the consequences of over contributing to an RESP?
Over contributions exceeding the $50,000 lifetime limit are subject to a 1% per month penalty tax until removed from the RESP.