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Financial Services: Registered Education Savings Plan in Canada with LMBF

While post-secondary education for many young Canadians can be a great opportunity, it can be expensive. An RESP - otherwise known as an education savings account or Canada Registered Education Savings Plan, is a great way to save for a multitude of educational expenses, which can rack up quickly. Those include student fees, tuition, books, living expenses, rent, and so on. Each year, the federal government will contribute to RESP savings, and lower-income families may qualify for a “Canada Learning Bond.” LMBF’s advisors are here to help provide you with advice on education savings accounts in Canada and navigate strategies to aid you in your journey to meet your financial goals.

The Benefits of LMBF’s RESP Services

Tailored Advice

Tailored Advice

Depending on how old your child is or where you are at in your current savings timeline, you need curated advice for your circumstances. LMBF’s advisors can help put you on the right path or advise you on how best to shift your strategies, depending on your goals and needs.

Investment Solutions

Investment Solutions

We all know that post-secondary can be expensive, but for many young Canadians, it’s the way forward. For parents or relatives who want a child to have numerous opportunities when it comes to their post-secondary education, LMBF can help provide investment solutions and strategies for ensuring that you may meet your financial goals.

  Reasons to need an RESP
  • Post-secondary education can be expensive for
  • Canadians You want to save up for your child’s higher education
  • You want to earn tax-free interest
  • You want flexibility if your child does not choose to continue their education
  Ways that an RESP may benefit you
  • RESP accounts can stay open for a long period of time
  • No annual contribution limits
  • Tax-deferred savings growth
  • Variation in contribution frequency
  • Anyone can open an account - relatives, friends, etc.

What is an RESP?

An RESP, or Registered Education Savings Plan, is a curated savings account for parents who are looking for a means to save up for their child’s post-secondary education. It is an investment vehicle that is available to caregivers. There are numerous advantages to RESPs, including that they are a means of generating a tax-deferred income. Caregivers can open RESPs without requiring to have a bank account and contributions can be made up until 31 years after the account has first been opened.

Our RESP Plan Advisor

The world of investments and savings can get complicated fast, and it can be especially difficult to navigate for those who are just starting out. If you are looking to support your child or young relative’s higher education, an RESP can be a great way to do just that. That being said, strategies can vary and shift depending on your existing financial obstacles and how old your child is. LMBF’s RESP plan advisors can help direct you on the proper path and ensure that the methods you take are best suited to your future goals.

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Looking to Get Started on Your Registered Education Savings Plan in Canada? Get Started By Discussing With LMBF’s Financial Advisors.

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Canadian RESPs: Some Frequently Asked Questions

A: Anyone may contribute to an RESP account if they would like to help support a child’s future education. Contributions may be subject to the lifetime or annual limits, depending on the plan. However, the beneficiary’s SIN will be required, so the contributor may need to contact the beneficiary’s guardians or custodial parents first.

A: Your RESP contribution strategy will largely depend on your child’s age, as the older a child is the shorter your timeline will be. Depending on when you open your RESP, your strategies may need to shift. Luckily, LMBF’s financial advisors can help provide you with curated advice on the best contribution strategy for your child’s RESP, depending on your circumstances.

A: If you choose to withdraw prior to your beneficiary enrolling in a post-secondary institution, some penalties will apply. Any government grants proportionate to your withdrawal will need to be returned, you may have to pay taxes plus a penalty of 20%, and the overall lifetime contribution of the RESP will be reduced by how much has been withdrawn. That being said, if you don’t close the account, any contribution income that is earned will stay in the plan.

A: RESPs can be used for any eligible education expenses, such as student fees, student supplies, laptops, rent, meals, and living expenses. There are consequences to withdrawing from an RESP early for non-educational expenses.

A: You do not pay any tax on investment earnings within the RESP account, so long as they stay in that account. Once your child is enrolled in a post-secondary education institution, they can receive payments known as educational assistance payments (EAPs.) Tax on EAPs are payable by the beneficiary or child, but students generally have either little or no income and so there will be very little tax to make on payments.

A: If your RESP is not used - i.e, if your child does not decide to continue their education following high school, you will not be taxed on your contributions but you may be required to pay taxes on money that was earned as interest. The money that you have contributed can be returned to you, but any CESG earned (if not shared with a sibling with grant room) must be returned to the Government of Canada. Once an RESP has been closed, you will have to pay tax on the RESP’s earnings.