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A Registered Education Savings Plan – or RESP – is a special savings account designed to pay for a child’s post-secondary education in Canada. A registered education savings plan is a relatively simple way for Canadian parents to save for their child’s education. Under a registered education savings plan the Canadian government will contribute a 20% bonus on the first $2,000 placed into a registered education savings plan account. In addition, the Canadian government provides several important tax breaks for contributions to a registered education savings plan, although there are penalties for early withdrawl from a registered education savings plan account. Provisions are made for withdrawl from a registered education savings plan if the student does not qualify for post-secondary education. Through a combination of tax-deferrments and lower tax rates on withdrawl, a registered education savings plan is a helpful vehicle for many families struggling to pay for college expenses. |
