Registered Education Savings Plan - RESP

AAA

DEFINITION of 'Registered Education Savings Plan - RESP'

A savings plan sponsored by the Canadian government that encourages investing in a child's future post-secondary education. Subscribers to an RESP make contributions that build up tax-free earnings - tax-free because subscribers cannot deduct payments made to the plan from their income. The government contributes a certain amount to plans for children under 18 under the Canada Education Savings Grant (CESG).

INVESTOPEDIA EXPLAINS 'Registered Education Savings Plan - RESP'

Payments are made by a contributor (parent) on behalf of a beneficiary (child). Once the child is in a post-secondary institution, he or she will receive educational assistance payments (EAPs). These EAPs count as income for the child (beneficiary). If the beneficiary doesn't receive payments - either by choice of the contributor or because the beneficiary does not attend a post-secondary institution, the contributor will receive the amount in the RESP back tax-free.

RELATED TERMS
  1. Nest Egg

    A substantial sum of money that has been saved or invested for ...
  2. Income

    Money that an individual or business receives in exchange for ...
  3. Bursary Award

    A type of financial award provided to certain students to assist ...
  4. Accumulated Income Payments - AIP

    Money withdrawn from a Canadian Registered Education Savings ...
  5. Tax-Deferred Savings Plan

    A savings plan or account that is registered with the government ...
  6. Earnings

    The amount of profit that a company produces during a specific ...
Related Articles
  1. Savings

    Don't Forget The Kids: Save For Their Education And Retirement

    Retirement and education financing are the two most important planning items for taxpayers.
  2. Insurance

    Investing In Your Child's Education

    Overwhelmed by increasing tuition costs for your kids? The U.S. government can help.
  3. Savings

    Canadian Grants And Tax Credits Fund Education

    RESPs and other grants help parents save for post-secondary education for their children.
  4. Retirement

    Tax Breaks For Canadian Families

    Canadians have a lot of advantages when it comes to family tax perks.
  5. Options & Futures

    Invest In Your Education With An RESP

    All Canadians should know the benefits of these flexible education savings plans.
  6. Taxes

    How To Use Your IRA As A Last-Minute Tax Deduction

    While some people are stressing over their taxes, there is a big advantage to delaying the process: You can maximize your 2014 contributions to your IRA.
  7. Retirement

    Best IRA Accounts For Beginners

    Opening your first IRA should be just an early step in your ongoing financial education, for the more help you need, the higher fees you're likely to pay.
  8. Professionals

    Tips for Gen X Savers at Age 50

    This is the time to stop and take a careful assessment of where Gen X savers are and see what changes they need to make to achieve their financial goals.
  9. Savings

    Best (And Worst) Places To Change Money In Vegas

    Skip the booths at the airport and find an ATM when you want to exchange currency. Or try to use your credit card. Another good source: casinos!
  10. Investing

    Rethinking About Retirement Investing?

    There are plenty of reasons to rethink your retirement investing, wherever you fall on the spectrum between fatalistic acceptance and cheerful confidence.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center