Registered education savings plan (RESP)
Registered education savings plan (RESP)
Give your kids a head start on their future. Contribute to a Desjardins RESP and take advantage of generous government grants.
What is an RESP?
RESPs are special savings accounts you can use to save up tax-free to pay for your children's post-secondary education.
You can take advantage of government grants that match your contributions by at least 30% to boost the RESP. Grants are based on your RESP contributions and your net family income.
Who can open an RESP?
Anyone can open an RESP for a child.
- Parents
- Friends
- Legal guardians
- Grandparents
The person who opens the RESP is the subscriber, and the designated child is the beneficiary.
How much does post-secondary education cost?
The answer to this question will help you calculate how much to save in an RESP.
Estimating the cost of your child's education
College and CEGEP expenses are divided into 4 categories:
- Tuition and school supplies totalling $3844 for 2 years.
- Housing and food totalling $27574 for 2 years.
- Transportation totalling $4580 for 2 years.
- Other expenses totalling $5656 for 2 years.
- Estimated cost for 2 College and CEGEP years: $41 654
University expenses are divided into 4 categories:
- Tuition and school supplies $17550 for 3 years.
- Housing and food totalling $41361 for 3 years.
- Transportation totalling $6870 for 3 years.
- Other expenses totalling $8484 for 3 years.
- Estimated cost for 3 university years: $74 265 $
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Advantages
Generous government grants
RESP beneficiaries in Quebec receive at least 30% in government grants on annual contributions of up to $2,500.
Amounts invested tax-free
Investment income and grants are only taxed when paid out to the beneficiary. When money is withdrawn, your capital is not taxable.
Flexible terms
There's no set amount or required contribution frequency. You decide how much you want to contribute and when, based on your financial situation.
You can also change the beneficiary or transfer funds from an RESP to a registered retirement savings plan (RRSP) if your child decides not to pursue post-secondary studies.
Automatic transfers
You can set up automatic transfers and adjust them online at your convenience. This takes the work out of saving and maximizes grants.
How RESPs work
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1
Open an account
You choose the best RESP for your needs, with the help of an advisor. Your advisor can open the account and make sure the grants you are entitled to are deposited. You must:
- Be a Canadian resident
- Provide your social insurance number (SIN) as well as that of your beneficiary
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2
Make regular contributions
You make deposits to the RESP. These contributions are topped up by grants. They grow tax-free in an investment vehicle that suits your risk tolerance.
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3
Withdraw the funds from the RESP
The money you've saved will be gradually paid out to your child as educational assistance payments (EAPs) to help cover the costs of their post-secondary studies.
Government grants and income earned on investments are taxed in the hands of the beneficiary, but often at a very low rate given that students generally have modest incomes.
The invested capital always belongs to you as the subscriber, and you can give it to the child or withdraw it. This withdrawal is not taxable, but the longer you wait, the better the return.
To determine the best withdrawal strategy, consult your advisor.
RESP grants
In Quebec, beneficiaries receive at least 30% in government grants toward their RESPs on annual contributions of up to $2,500.
Canada Education Savings Grant (CESG)
- Up to $600 a year, with a maximum lifetime limit of $7,200 per child
- Is paid out automatically, every time you contribute
- Rate varies between 20% and 40% based on your net family income
Québec education savings incentive (QESI)
- Up to $300 a year, with a lifetime maximum of $3,600 per child
- Is paid out automatically once a year
- Rate varies between 10% and 20% based on your family income
Good to know
Subscriber
- The beneficiary does not have to be related to you by blood or adoption
- You may name only 1 beneficiary
- All capital belongs to you, regardless of whether the child continues their studies
Contributions
- You get to decide how much and how often you contribute
- You tell us how you want to invest your contributions
Tips to get the most out of an RESP
Start contributing early
It's best to contribute from the child's early years to maximize government grants and take advantage of accumulated returns.
Automate payments
With scheduled payments, the amount you specify is automatically withdrawn from your account without your having to think about it.
Contribute $2,500 every year
The annual maximum for basic grants is $500 for federal (20% of the amount contributed) and $250 for Quebec (10% of the amount contributed), which corresponds to a contribution of $2,500.
You can contribute up to a $50,000 lifetime limit per beneficiary. However, a maximum lifetime contribution of $36,000 is required to reach the cumulative grant limit of $7,200 for federal and $3,600 for Quebec.
Take advantage of child and family benefits
Deposit the Canada child benefit and the Quebec Family Allowance payments into the RESP. The RESP's capital will grow without you having to contribute an additional amount.
How to withdraw from an RESP the smart way
When your child starts their post-secondary program, you'll be glad you carefully planned the distribution of withdrawals between the capital and educational assistance payment (EAP). Your advisor can help you assess your options and develop the right withdrawal strategy for you and your child.
Things to discuss
- Your child's financial needs during their school years
- Your child's sources of income
- The tax implications for you and your child
FAQ – Registered education savings plans (RESPs)
- Other expenses include clothes, shoes, activities, phone and internet.
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The total estimated cost is based on the 2022 year and over an average period of 2 years of college and 3 years of university. The amounts shown by expense type are intended solely to provide an approximation of each expense item. These expenses can change over time and vary between Canadian cities and provinces. Tuition fees may also vary by program of study and educational institution.
Sources: Statistics Canada - External link. et Ministry of Education and the Ministry of Higher Education - External link. .
- If you decide to change beneficiary or transfer funds to an RRSP account, any government grant received must be reimbursed.
- Eligibility is based on net family income and number of children.
- Desjardins Funds are not guaranteed, their value fluctuates frequently, and their past performance is not indicative of their future returns. Commissions, tailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Desjardins Funds are offered by registered dealers.
Online tools are made available to you for information purposes and for personal use only. They give an approximate result based on the information you enter. Desjardins does not guarantee their accuracy or their applicability to your circumstances.
You are encouraged to speak with a Desjardins advisor before taking any action based on information found in the calculator.
Desjardins cannot be held liable under any circumstances for an incident and/or damages, including the loss of revenue and profits, resulting from the proper or improper use of the calculator.