Registered Education Savings Plan

Definition

• Education savings plans that grow tax free until a child is ready to pursue a post-secondary education, at which time the money is withdrawn to help finance the costs.

Relevant Locations
Canada

Notes
RESPs are offered by most financial institutions in Canada.

Acronyms
RESP

Related Terms and Acronyms

• Accumulated Income Payment (AIP) — Acronym, Canada,
  • A payment of the income earned from an RESP, usually paid to the subscriber.
• Canada Education Savings Grant (CESG) — Acronym, Canada,
  • Program recently introduced by the federal government whereby it will invest, in the form of grants, along-side parents who save for their children's education through RESPs. The government will top up contributions made to an RESP by 20% up to a yearly maximum of $400 per beneficiary.
• Canada Education Savings Program (CESP) — Acronym, Canada,
• Canada Learning Bond (CLB) — Acronym, Canada,
  • A grant offered by the Government of Canada to help parents, friends, and family members save early for the post-secondary education of children in modest-income families.
  ➥ See also Canada Education Savings Grant (CESG).
• Child Tax Credit (CTC) — Acronym,
  • A tax break for those who claim eligible dependent children on their tax returns.
  ➥ See Canada Child Tax Benefit (CCTB).
• Education Savings Plan (ESP) — Acronym, Canada,
  • A savings vehicle used to save for a child's post-secondary education.
  ➥ Offers tax-free earnings.
• Educational Assistance Payment (EAP) — Acronym,
  • A payment from an RESP to assist a beneficiary in covering expenses associated with post-secondary education.
• Informal Trust — Definition,
  • Also known as in-trust account or "bare" trust, this is an investment account registered in an adult's name in trust for a child. The account is used to save/invest funds for a child, and the funds must be reserved for and used by the beneficiary child.
• Registered Retirement Savings Plan (RRSP) — Acronym, Canada, Very Important,
  • A savings plan introduced by the federal government to encourage Canadians to save money for retirement. The investment and the interest earned on it is sheltered: it will not be taxed as long as it is left in the plan.
  ➥ Tax deferred investment contribution used to reduce income tax.
• RESP Dealers Association of Canada (RESPDAC) — Company, Canada,
• Tax Deduction — Definition,
  • An expense that governments allow you to subtract from your income before computing your income tax.
• Tax-Free Savings Account (TFSA) — Acronym, Canada, Important,
  • A savings account for Canadians where income earned is not taxed.
• Tax-sheltered — Definition,
  • A savings or investment plan that offers significant tax savings.
• Trust — Definition,
  • A fund established like a will, specifying how money or property will be disbursed, lists the recipients or beneficiaries and names one or more trustees to manage the assets. An irrevocable trust can't be changed after the terms are finalized; a revocable trust has more legroom in how much can be transferred, but is usually costlier to maintain.