What is an RESP?

An RESP is a government-registered savings plan that allows parents, grandparents, or other contributors to save money for a child's future education expenses. The funds in an RESP grow tax-deferred, and when the child enrolls in a qualifying post-secondary institution, the withdrawals are taxed in the child's name, which is typically at a lower tax rate.

Key Features of an RESP

• Government Grants: With an RESP, you can benefit from the Canada Education Savings Grant (CESG), where the government matches a percentage of your contributions, up to a certain amount.
• Tax-Deferred Growth: The money you contribute grows tax-free until the beneficiary withdraws it for education expenses.
• Flexible Contributions: You can make lump-sum or regular contributions to the RESP and decide how much to contribute each year based on your financial situation.
• Wide Range of Investment Options: You can invest in a variety of assets within the RESP, including stocks, bonds, mutual funds, and GICs, to grow your savings over time.
• Educational Withdrawals: When the child is ready for post-secondary education, the funds are withdrawn to pay for tuition, books, and other education-related expenses.

Why Open an RESP?

• Government Contributions: The government contributes to your RESP through the CESG program, helping you maximize your savings for your child's education.
• Tax Benefits: Contributions are not tax-deductible, but the growth in the plan is tax-deferred, and withdrawals are taxed in the child's name, which is often at a lower rate.
• Saving for Education: An RESP makes it easier to save specifically for your child's education, ensuring they have the funds needed to pursue their studies after high school.
• Flexibility in Usage: Funds can be used for a wide variety of education-related expenses, including tuition, textbooks, and even room and board if the child studies away from home.

How Much Can You Contribute to an RESP?

The maximum lifetime contribution limit for an RESP is $50,000 per beneficiary. There are no annual contribution limits, but contributions to the plan may be limited by the available government grants. Additionally, the CESG provides up to 20% in matching contributions on the first $2,500 of annual contributions, up to a maximum of $500 per year per beneficiary. Any unused contribution room can be carried forward for future years.

How Does the Canada Education Savings Grant (CESG) Work?

The **Canada Education Savings Grant (CESG)** is a government program designed to encourage families to save for their children's post-secondary education. The government matches 20% of your contributions, up to $500 per year for each child, for the first $2,500 contributed. There are also additional grants available for families with lower incomes, so your contributions may be eligible for higher matching rates.

Who Can Contribute to an RESP?

Anyone can contribute to an RESP for a child, including parents, grandparents, and other family members or friends. The contributions do not have to be limited to the child’s immediate family, allowing multiple people to help save for a child’s education.

How to Open an RESP

Opening an RESP at Newfoundland and Labrador Bank is simple. You can open an account for any child under the age of 18 and begin contributing right away. Our financial advisors are available to guide you through the process, help you select the best investment options, and ensure you take full advantage of the available government grants.

Start saving for your child's future today with a **Registered Education Savings Plan (RESP)** at Newfoundland and Labrador Bank. Let us help you build the foundation for your child's educational success!