
How can parents in Edmonton and beyond save for their child's education?
Updated: Sep 16, 2020
A registered education savings plan (RESP) is an investment account designed to help you save for a child's education. RESPs can be used to pay for your child's college or any post-secondary education. They are government-regulated accounts and offer tax-free investment growth.
You can open an RESP in the name of any future college or trade school student. It can be opened by anyone — a parent, grandparent, or even someone unrelated to the child. There’s also something called a “family RESP,” which has the advantage of being able to be spent on any sibling in a family instead of just one child — but it must be opened by parents or grandparents.
The government’s Canadian Education Savings Grant (CESG) will match 20% of up to $2,500 per year per child. And CESG will keep matching annually until it maxes out at $7,200 per child. As long as the money sits in the RESP (accounts can remain open for up to 36 years) all gains will remain tax-free. When a student does withdraw money to pay for tuition or university-related expenses, he or she will owe tax only on the interest, dividends, capital gains, and the government’s CESG contributions.
If a child decides not to pursue post-secondary education, the money can be used by a sibling for his or her education. Or the money can be transferred to the contributor’s personal RRSP retirement account free of any tax penalties- though the CESG contributions will be returned to the government.
Ready to start saving for your child's education? Let's schedule your free consultation today to get you started saving for your child's future.