Registered Education Savings Plan - RESP


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).

BREAKING DOWN '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.

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    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    Money withdrawn from a Canadian Registered Education Savings ...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 ...
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  1. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>
  2. Are 401(k) contributions tax deductible?

    All contributions to qualified retirement plans such as 401(k)s reduce taxable income, which lowers the total taxes owed. ... Read Full Answer >>
  3. Are 401(k) rollovers taxable?

    401(k) rollovers are generally not taxable as long as the money goes into another qualifying plan, an individual retirement ... Read Full Answer >>
  4. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  5. Can catch-up contributions be matched?

    Depending on the terms of your plan, catch-up contributions you make to 401(k)s or other qualified retirement savings plans ... Read Full Answer >>
  6. Are catch-up contributions included in actual deferral percentage (ADP) testing?

    Though the Internal Revenue Service (IRS) carefully scrutinizes the contributions of highly compensated employees (HCEs) ... Read Full Answer >>

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