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Introduction to the Canadian RESP Account

The Registered Education savings Plan (RESP) account is an investment vehicle that is designed for college planning. Parents, grandparents and other family members often desire to financially contribute to a child’s future higher education costs. As Canadians desire to plan financially for their children’s high education costs, the RESP account is a popular investment tool to utilize for the purpose.

The RESP account offers individuals several tax benefits when they utilize the account for higher education purposes. The primary tax benefits include tax free growth and tax free withdrawal when the funds are utilized for qualified higher education expenses. There are several important regulations to become familiar with for the RESP account:

  • Contribution Amounts- The maximum total contribution per child into the RESP account is $50,000. There is not currently an annual maximum contribution limit, although when they account was initially created, there were annual contribution restrictions to adhere to.
  • Account Beneficiaries- The account must be registered with a beneficiary. This beneficiary must be a child with a registered social insurance number. Each child may have more than one account established, allowing multiple family members to create accounts to aid in the future higher education costs.
  • Age Restrictions- The beneficiary listed can access the funds for higher education purposes at any age. But, the funds must either be utilized or the account must be dissolved before the beneficiary reaches the age of 25.


Contributions into the RESP account are not tax deductible. But, the tax free growth allows the funds to grow more quickly than they would if they were in a taxable investment account.

For individuals who are looking to establish a RESP account, there are a variety of financial institutions that they can establish this account with. Some of options for establishing a RESP account include banks, credit unions, mutual fund companies, investment houses and trust companies. Each type of financial institution will offer a variety of investments to use within their RESP accounts. So, when selecting a financial institution, be sure to evaluate which accounts are the best match for your financial goals and needs.

Most financial institutions will offer a variety of investments to select from within their RESP accounts, including securities, bonds, mutual funds and cash. So, account holders have the option to develop an investment diversification that matches their risk tolerance and their investment time frames.

Canadians need to save for many different purposes over their lifetimes. In addition to RESP accounts reducing taxes on savings can also help. That’s why the Government has introduced a new Tax-Free Savings Account (TFSA). It’s likely the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP).

The TFSA will allow Canadians to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetimes. TFSA savings can be used to purchase a new car, renovate a house, start a small business or take a family vacation. With the TFSA Canadians from all income levels and all walks of life can benefit.

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