RESP Year End Basics

This post was written by the former Estonian Credit Union, now Northern Birch Credit Union.

December is a month full of shopping, festivities and time spent with family. Each year during the holiday season we have the hard job of deciding what plans fit into our busy schedules and, more importantly, what fits into our budgets!

Thankfully, every year the Registered Education Savings Plan (RESP) contribution deadline is December 31, giving you time to make your contribution and maximize the government grant.

It is easy to remember and easy to see why an RESP is a great gift that will keep on giving long after the excitement of new toys has worn off. Whether you have the funds to max out the plan, or set up smaller scheduled contributions, you can’t go wrong.

What is an RESP?

An RESP is a special savings account that parents or grandparents can set up for a child’s education after high school. The Canada Education Savings Grant then matches 20% of annual eligible contributions.

Key Numbers:

  • 20% of annual eligible contributions matched by government

  • $2,500 amount of yearly contribution that 20% will be matched by government from 2007 on ($2,000 from when child was born up until 2006)

  • $7,200 maximum lifetime grant per child

  • $50,000 maximum contribution room per beneficiary

Important things to note
*Child must be a resident of Canada and have a SIN number
*Not tax deductible, however, it grows tax free
*RESP grants can be earned on contributions made up until December 31 on the year they turn 17

If you have any questions contact our investment specialists Heili Orav or Liisi Lainelo in branch and they will be happy to help!

The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice.

Author: NorthernBirchCU

A co-operative financial institution based out of Toronto, Ontario.

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