Self-Directed RESP

A Registered Education Savings Plan (RESP) is a tax-advantaged registered plan that lets you save for a child’s post-secondary education and take advantage of government grants to help build their savings even faster. Investment earnings (like interest, dividends and capital gains) grow tax-free until they are withdrawn by the student. The features, benefits and rules for RESPs are determined by the Government of Canada.

To learn more about RESPs, check out Understanding RESPs: The Basics.

A Registered Education Savings Plan (RESP) can be set up for your children, grandchildren, nieces, nephews or family friends to help save for their post-secondary education. Each beneficiary must be a Canadian resident and have a Social Insurance Number (SIN).

Once you have opened an RESP, you can contribute as much as you want each year; however, there is a lifetime contribution limit of $50,000 per beneficiary. The money you contribute can be used to purchase and hold a range of investments in the RESP, including stocks, mutual funds, exchange-traded funds (ETFs), guaranteed investment certificates (GICs) and bonds.

One of the main benefits of using an RESP to save for a child’s post-secondary education is the government assistance given in the form of grants, bonds and incentives. Two of the most common ones are the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB).

• With the CESG, the government matches 20% on the first $2,500 contributed annually to an RESP, to a maximum of $500 per year. The maximum total CESG the government will give is $7,200 per beneficiary.
• The CLB is available to children who are from modest income families that meet certain income tax thresholds. The maximum CLB payable per child is $2,000.

The money in an RESP grows on a tax-deferred basis. When the beneficiary withdraws money as an Educational Assistance Payment (EAP), the accumulated investment earnings (like interest, dividends and capital gains) are taxed in the student’s hands. However, since most students have very little income, they often will pay minimal tax (or no tax). These withdrawals can be used to pay for school tuition, housing, books, school supplies and other educational expenses at a college, university, trade school or other post-secondary institution.

The features, benefits and rules for RESPs are determined by the Government of Canada.

RESPs can be used to pay for a child’s post-secondary education, including college, university, trade school and more. Because the plans can stay open for up to 35 years, there’s no rush to use the funds if your child chooses not to pursue a post-secondary education right away.

Contribute any amount to an RESP, subject to a lifetime contribution limit of $50,000 per beneficiary. You can contribute to an RESP for a maximum of 32 years (the year the plan opened plus 31 years), and the plan can remain open for a maximum of 35 years.

If the child (beneficiary) is enrolled in a qualifying post-secondary educational program, you can submit an RESP withdrawal request form to pay for school tuition, housing, books, school supplies and other educational expenses.

RESP withdrawal forms can be found by selecting Forms and Agreements under the Profile Icon when you are logged into your account, or by visiting Download Forms and selecting Withdrawal Requests from the drop-down menu.

Once you have completed the form, please forward it to RBC Direct Investing either by mail or in person at an Investor Centre or RBC Royal Bank branch.

RBC Direct Investing Inc.
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200 Bay Street, North Tower
P.O. Box 75
Toronto, Ontario, M5J 2Z5