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Maximize RESP grant with these tips

RESP is a popular education scheme run by the Canadian government that enables you to save for your child’s education. The government also chips in with some contribution in your RESP account. 

However, you need keen planning to maximize the benefit of this scheme. While you may know RESP basics, you can grow a substantial fund with advanced RESP strategies. For more information on RESP rules in Canada, click on this

Here are tips to maximize your RESP earnings

It is crucial to have a financial roadmap that will enable you to make efficient savings for your child’s higher education. Here are some tips that can help you maximize your RESP contributions.

Save Up To The Maximum Contribution Limit

RESPs have a $ 50,000-lifetime contribution limit for each beneficiary. While the maximum CESG is only $7,200, you can save up to $50,000 to maximize tax benefits and investment growth.

Since tuition fees are rising, you should save as much as possible. However, you should keep in mind that the government is liable to deduct 1% of your lifetime contributions exceeding $50,000 as a penalty.

Withdraw Money From Your RESP Tax-Effectively

You can organize your withdrawals to minimize your tax liability. Your children are eligible for financial assistance in the form of Educational Assistance Payments if they attend a post-secondary institution. EAPs are generally taxable at a low rate because students do not have any income.

Since contributions are not taxable, you may effectively spread them out to avoid paying taxes. You can withdraw the taxable portion from your RESP account when the child’s income is low. Likewise, you should withdraw tax-free post-secondary education payments from your contributions when you fall under a higher tax bracket.

Take Advantage Of The Free Money Available

The Canada Learning Bond and the British Columbia Training and Education Savings Grant may provide you with up to $3,200 in free money based on your child’s age and your family’s net income. You must look to take advantage of such contributions.

Consider Using A Variety Of Different Savings Vehicles

Education savings vehicles include RESPs, TFSAs, and non-registered savings accounts (NSAs). Each plan type offers several advantages and disadvantages and should tailor your strategy to your family’s objectives and financial situation.

RESPs are popular as they are eligible for incentives from the Canadian government and some provincial grants. However, they have a $50,000 lifetime maximum per child. If your child’s education plan expenditures seem to be likely to exceed that amount, you may choose to make additional savings outside of the RESP. Several choices are as follows:

Use non-registered account

A non-registered account provides you with a lot of flexibility since there are no restrictions on contributions or money used. However, unlike RESPs, investment income is taxable in the earned year, and no grants are available.

Use a TFSA

While TFSA earnings and withdrawals are usually tax-free, government grants are not accessible, and contribution limits apply. The ideal choice combination depends on your child’s age, savings goals, and budget. Consult your advisor to determine the best strategy for your particular situation.

Change Your RESP Investment Strategy Over Time 

The optimal investment mix for your RESP changes according to your child’s age. 

  • Consider capital preservation investments if your child is older and you plan to withdraw funds shortly. 
  • Higher-risk, growth-oriented investments may be a suitable option for you if your child is younger and you have the opportunity to ride the waves of future market volatility. 

It’s a good idea to work with your advisor as your child gets older to evaluate and change your investment strategy.

Keep It Flexible

Your child may have different educational goals. Make sure the RESP plan you choose allows you to change beneficiaries free of charge if one child decides not to go to college. Your earnings may be tax-free if none of your kids attend post-secondary school and you close the plan with a contribution room.

Top Up Your Contributions If There’s Room

If you have extra funds and haven’t used all of your government grants, you might choose to raise your contributions. A great way to increase your RESP contributions is to ask family and friends to make contributions in place of traditional gifts on special occasions like birthdays and holidays.

Consider Who Should Open The RESP

The RESP should be set up with the youngest parent as the subscriber. If you have to close the plan, you may be able to transfer RESP earnings tax-free to plan subscribers’ RRSP. The age limit for RRSP contributions is 71, and therefore, this isn’t possible if the subscriber is over 71.

Apply For The Canada Learning Bond (CLB)

Unlike the CESG, the Canada Learning Bond does not require any financial contribution, and it’s ‘free money that the government gives to low-income RESP recipients, and it should only finance post-secondary education.

For eligible RESP beneficiaries, the government contributes up to $2,000, and it includes a $500 eligibility payment and a $100 annual payment if the child qualifies for RESP until the age of 15.

Withdraw All Funds Before Post-Secondary Education

An RESP’s primary purpose is to help pay for your child’s post-secondary education. If money remains in the account after higher education, the government will take the leftover grants and only allow withdrawals of contributions.

If your child completes their education, you can withdraw all the funds and interest you’ve earned without any problems. If you have multiple children, you may be able to transfer the remaining funds to their RESPs.


Start saving after the child’s birth. If you have saved a large amount of money, Registered Education Savings Plans (RESPs) may be a good option for you. Follow all of the helpful tips listed above to maximize your savings. 

You should choose an amount of money that you can regularly contribute to maximizing your government grants. Automating contributions is the best way. If you’re having difficulty making payments, you may seek the assistance of friends and family to contribute to your child’s RESP account.

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