What is a Registered Education Savings Plan (RESP)?

A Registered Education Savings Plan (RESP) is a investment vehicle designed specially to accumulate savings for a child's post secondary education. The savings accumulated in the RESP are intended to cover the tuition fees plus all education-related expenditures including: housing, school supplies, food, transportation expenses, etc.

As is the case with a registered retirement savings plan (RRSP), the federal government of Canada permits the investment income from an RESP to grow tax sheltered as long as it is not withdrawn from the plan. - Basically, a RESP is to education what the RRSP is to retirement.

In addition, to encourage parents to invest in the post secondary education of their children, the federal government of Canada will also provide a Canada Education Savings Grant (CESG) corresponding to 20% of the annual contributions paid into the plan, up to a maximum of $500 per year, per beneficiary. The lifetime maximum grant paid per beneficiary cannot exceed $7,200.