Registered Education Saving Plans, commonly referred to as RESPs, should form an integral part of every educational savings plan.

The federal government allows you (the subscriber) to contribute money toward the post-secondary education of a child (the beneficiary) and the assets inside the plan will grow on a tax-deferred basis. In addition, the federal government will also assist you by depositing grant money into the RESP subject to limitations, which are discussed later.

Subscribers can make a maximum lifetime contribution of $50,000 per beneficiary. The annual maximum contribution for Canada Education Savings Grant (CESG) entitlement is $5,000.

Therefore, if you contribute the maximum each year, it would take 10 years to contribute the maximum to an RESP for one beneficiary.

Remember, as well, that the limit applies to each beneficiary, not subscriber. So, if there is more than one RESP plan set up for a beneficiary, then the aggregate contributions from all subscribers cannot exceed the lifetime limit of $50,000.

If a subscriber has contributed more than the lifetime limit to an RESP, he/she will be subject to a penalty tax of 1% per month of the amount of the over contribution at the end of that month.