How to Set Up an RESP
Set up a registered education savings plan (RESP) in Canada and enjoy tax-free earnings on money saved for college. This flexible, government-approved savings account also makes the beneficiary eligible for the Canada Learning Bond and Canada Education Savings Grant. Creating an RESP today gives you a way to accumulate money for college without adding to your immediate tax debt.
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Things You'll Need
- Birth certificate(s)
- Social Insurance number(s)
- RESP provider at a financial institution
Instructions
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Outline Educational Goals
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Consider for whom you will be saving. Decide how many children or beneficiaries you need to cover and then assess the likelihood of each pursuing postsecondary education.
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Make sure the educational goals of each beneficiary will result in a qualifying learning program of at least 3 consecutive weeks, full- or part-time, with at least 10 hours per week. Foreign study must be no less than 13 weeks.
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Ask about college or trade school before you set up an RESP for a grandchild, other family member or someone not related to you. Find out what his savings needs are so you can accurately plan how much to save.
Set Up an RESP
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Locate the Social Insurance number for the prospective account holder and all plan beneficiaries.
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5
Secure a birth certificate for the beneficiary from your provincial or territorial government.
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Compare RESP services and fees among providers. Your savings relationship could last for decades, so take the time to learn whom you'd like to work with and which company will work the hardest for you. Some institutions charge you fees for consultation, while others only charge you when you make changes to your account.
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Choose among your provider's individual, family and group RESP plans.
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Select investments with the help of your plan provider. Your best bet is to select a conservative mix of T-bills, stocks and mutual funds if your child is young. For children almost ready for college (1 to 3 years away), you may try a more aggressive RESP plan to maximize your investment.
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Deposit the initial savings or grant money to start the account.
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Tips & Warnings
You can open an RESP for a family member or a child who is not related to you. If that person already has an RESP, your total contributions will be subject to annual allowable limits, so you be aware of how much each interested party is investing.
You can open an RESP for yourself, another adult or a minor child.
Allowable dollar limits may change from year to year. Check with your plan administrator to ensure you're contributing the maximum.
Your contributions to an RESP account are not deductible from your annual tax assessment.
Some investments incur fees beyond the plan maintenance costs, so pursue all of the details before making your investment selections.
