For more detailed information go to: Human Resources and Social Development Canada
Registered Education Savings Plans (RESP)
The primary education savings vehicle available today is an RESP. It allows you to leverage your savings by providing a grant equal to 20% of your personal deposit, in the plan of your choice. The maximum lifetime grant is $7,200 and the qualification for the grant is based on $2,000 deposit per year for 16 years. Details are available through the link. For information purposes we have recapped a coule of key points and provided an example of a withdrawal, but the rules should be confirmed with the proper web site.
Types of Plans
Individual Plans are available to provide for one person. Family plans allow parents to create one plan with all their children on it and provide the ability to share the assets. (See axample below) Grandparents may create a family plan for all their grandchildren allowing the sharing of the benefit between cousins.
RESP withdrawal Rules
Here is a sample of what a mature plan may contain and how it can be accessed. Assume that at the time of withdrawal it contains:
Principal: $44,000
Grant: 8,800
Growth 6,675
Up to $5,000 from the Grant and Growth portion for the first 90 days
Some or All of the Capital (deposits) in the plan without regard to original beneficiary.
After the 90 days, you may withdraw the balance of the growth with no restrictions
After 90 days you may withdraw the balance of the grant (not taken in #1) to a maximum of $7200.
If for example you have 3 children in the plan, the first child's grant equaling $2,400, the second and third with $3,200 each, the first child may withdraw a total of $7,200 even though it was not all his. As you can see from this there is a high degree of flexibility in the use of the money.
