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RESP: The value of an education

The faster, easier way to save

Imagine graduating with less stress, lower debt and a financial head start.

As a physician, you understand the high cost of pursuing a dream and you know the value of education. A registered education savings plan (RESP) can help make higher education an affordable reality for your child.

An RESP is a tax-deferred savings plan, created by the federal government, that provides a tax-effective way to save for a child’s education. There are three reasons to consider investing early, staying committed and taking advantage of every opportunity the RESP provides:

You can contribute up to $50,000 per child to an RESP. The savings inside the RESP grow and no tax is paid on the gains until it’s time to withdraw. Choose from a wide variety of options for that investment within the RESP, including MD or other funds, cash, fixed income and equities.

Every year you contribute, the federal government will add to your child’s RESP to help your savings grow even faster. You could receive up to $7,200 per child with the Canada Education Savings Grant (CESG) by the time that child reaches 18. And that does not include any earnings on the grant money.

In addition to the federal grant, some provinces also offer grants. See the full list here.

Parents are not the only ones who can fund their child’s RESP. Grandparents, other relatives, friends and anyone else can also contribute.

A mother and her child chatting in a park

An RESP offers flexibility, tax-deferred investment growth and government assistance, all in one easy-to-manage plan.

Quick facts about RESPs

Taking money out of your RESP
Once the child designated in the RESP is enrolled in a qualifying post-secondary school, you can start to take the money out. The withdrawals from your original contributions are received tax-free. The money from the grants and investment growth is considered income for the student and is taxable at the student’s rate. Fortunately, most students are in the lowest bracket, so there is typically little to no tax owing.

Maximizing additional government funding
It’s unlikely that, as a physician, your household income would be modest enough to be eligible for additional grants. In case you are, it would mean an extra 10% or 20% is added to the first $500 contributed to an RESP each year.

What happens if your child doesn’t go to a post-secondary school
You have options if your child chooses not to pursue post-secondary education. In most cases, you have the flexibility to name an alternative child as the recipient of the funds. In other cases, you may be able to simply withdraw the cash and pay the applicable taxes or transfer it to your RRSP. An MD Advisor* can guide you through the alternatives.

Federal and provincial governments appreciate the value of education

Find out how much you could receive.

Canada Education Savings Grant (CESG)

  • A 20% grant on the first $2,500 contributed to an RESP each year. If there is unused grant room from prior years, you may qualify for an additional $500 grant (20% on the next $2,500 contribution) for a total of $1,000.
  • The maximum lifetime grant is $7,200 per beneficiary.

Additional Canada Education Savings Grant (Additional CESG)

  • An additional 10% or 20% on the first $500 or less contributed to the RESP annually
  • Benefits low-income and middle-income families

Canada Learning Bond (CLB)

  • Up to $2,000
    • $25 to open an RESP account
    • $500 to add to the RESP immediately
    • $100 per year until the child turns 15
  • Benefits low-income families

British Columbia Training and Education Savings Grant (BCTESG)

  • A contribution of $1,200 for eligible children born in 2006 or later

Quebec Education Savings Incentive (QESI)

  • An annual incentive payment to an RESP for an eligible beneficiary who resides in Quebec, to a maximum of 10% of contributions (maximum payment of $250 in any given year)
Grandparents playing cards with their grandson

Make an RESP part of your plan

Start preparing for post-secondary education expenses now by saving a little every month in an RESP from MD.