RESPs
What are RESPs?
RESPs are a vehicle for building wealth to pay for a child’s post-secondary education. Capital within the RESP is allowed to grow untaxed until the beneficiary attends a post-secondary institution and begins withdrawing funds. When the withdrawals begin, the student (beneficiary of the plan) pays taxes only on the income earned by the fund and on the CESC portion of the plan, not on the original contribution. The original contribution was made with after tax dollars. Taxes paid by the student on RESP income are likely to be low or non-existent, since the student is likely to have little other income during the year.
- Contribution limits are $4000 per year per beneficiary for a lifetime maximum contribution of $42,000 per beneficiary.
- The Canadian Education Savings Grant (CESG) allows eligible RESP beneficiaries to receive grant monies based on the annual contribution paid into the plan. The Government will contribute 20% annually on the first $2000 deposited into an RESP for children up to age 18*.
- All children under the age of 18* and resident in Canada automatically accumulate CESG contribution room.
- Annual CESG maximum is $400 per beneficiary with a lifetime CESG maximum of $7200 per beneficiary.
*Some restrictions apply for beneficiaries’ age 16 and 17.
Investment Options
- Choose between 1 to 5 year Fixed Term investments at competitive rates.
Contact the Credit Union today for rates or more details.