An RESP provides a convenient way to accumulate funds for your child's or grandchildren post secondary education. Interest earned in the plan is tax-free. Upon withdrawal, the funds will be taxed at the beneficiary's income tax bracket.
One of the best things about an RESP is the top-ups given by the federal government.
The Canada Education Savings Grant (CESG) matches your annual contribution by 20% to a maximum of $500 per year. The CESG has a lifetime maximum of $7,200 per child. The Canada Learning Bond (CLB) provides an additional lifetime grant of up to $2,000 per child for qualifying families.
When the beneficiary enrolls into an eligible program, they can start receiving educational assistance payments (EAPs) from their RESP to pay for tuition, school supplies, residence and more.