Many Canadians contribute to a Registered Education Savings Plan (RESP) to cover costs related to their child’s/grandchild’s post-secondary education.
Many Canadians contribute to a Registered Education Savings Plan to cover costs related to their child’s/grandchild’s post-secondary education.
Contributions – Contributions can be withdrawn with no tax consequence. Since RESP contributions are not tax deductible, there are no taxes owing when they are withdrawn. Investment growth – This portion, when withdrawn, is known as an Accumulated Income Payment and is taxable at your marginal tax rate plus an additional 20% tax. The additional 20% tax can potentially be avoided by transferring up to $50,000 AIP from the RESP to your Registered Retirement Savings Plan with available contribution room with no immediate tax consequence. More information on this transfer is available on the Government of Canada website.
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