Maximize your resp contributions

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Let"s face it, it"s hard to lớn imagine your newborn studying Shakespeare when you"re more focused on changing diapers và establishing a sleep schedule.

Besides newborn duties, competing priorities for some of us, like rent, a mortgage or daycare costs, can also putRegistered Education Savings Plan (RESP)contributions on the back burner.

Fast-forward a few years, & suddenly you realize those post-secondary years are approaching far more quickly than you expected. Maybe you"ve now got an 8-year-old, or (gasp) even a 14-year-old, và you"ve contributed exactly $0 to an RESP.. That"s right...zilch! What now? Is it too late? We get it, time goes fast, but it"s not necessarily too late.

RESPs offer a way to lớn "catch up" on education savings if you didn"t get started right away. All may not be lost! Here"s what"s involved:

Not Losing Out: That Precious Grant Money

Besides offering tax-deferred investment growth, RESPs have another benefit that can be leveraged. Through the Canadomain authority Education Savings Grant (CESG), the most comtháng of the government grants available, you can add to your RESP savings.

The Basics

What You Get: The basic CESG provides trăng tròn cents on every dollar you contribute to an RESPhường., up khổng lồ an annual maximum of $500. So, if you put in $2,500, you"d be eligible for the full $500 in grant money available each year.Limits:The maximum amount available under the basic grant is $7,200 per child.The Carry-Over Feature:If you don"t get the full grant amount each year, any unused grant room accumulates & carries forward until the year a child turns 17. You can go bachồng one year at a time khổng lồ ảo diệu for missed contributions.

Carrying Forward Contributions

If you"ve delayed starting an RESP or haven"t been able to contribute enough to lớn get the maximum grant amount each year, you may still be able khổng lồ take advantage of that "free" government grant money.

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The carry-forward option effectively allows you to double up on contributions khổng lồ help you catch up on missed grant money. One catch is that you can only use one previous year"s worth of contribution room each year.

So, let"s say you normally contribute $2,500, but missed last year"s contribution altogether, which also meant no $500 grant. If your child meets the 17-year-old cutoff requirement, you could double your contribution lớn $5,000 this year và the government contribution would rise to lớn $1,000 lớn Cosplay for last year"s missed grant.


"The carry forward option means that even if you started late or missed some years, you may still be able lớn receive sầu the maximum grant amount."


The carry-forward option means that even if you started late or missed some years, you may still be able khổng lồ receive the maximum grant amount. If you decide when your child is nine years old to start an RESPhường and you can contribute $4,500 annually, you could still receive sầu the full $7,200 of basic grant money within the eligible timeframe. Here"s what that could look like:


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Here"s another example. You have a 14-year-old but haven"t made any contributions to date. If you open an RESPhường. in the calendar year your child turns 14, you could have four years to lớn contribute and double-up on the grant amount. For example, a contribution of $5,000 annually would allow you to lớn receive $1,000 of grant money each year ($500 for the current year & $500 for unused room from a previous year). That would mean a total grant amount of $4,000 — less than the $7,200 maximum available, but still sizable!

One important age khổng lồ keep in mind is 15. In order to be eligible foranyof the grant money, an RESP must be opened before the over of the year a child turns 15 and must have sầu met certainminimum contribution levels.

Statistics Canada reports that the average tuition cost in 2015/16 was just over $6,000, so while any extra amount can help, the full grant amount could cover a full year"s tuition. Plus, every extra dollar adds khổng lồ the possible compound growth of your savings over the years.


RBC Direct Investing Inc. và Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canadomain authority và is a Member of the Investment Industry Regulatory Organization of Canadomain authority and the Canadian Investor Protection Fund. Royal Bank of Canadomain authority và certain of its issuers are related to RBC Direct Investing Inc. RBC Direct Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing is a business name used by RBC Direct Investing Inc. ® / ™ Trademark(s) of Royal Bank of Canadomain authority. RBC và Royal Bank are registered trademarks of Royal Bank of Canadomain authority. Used under licence. © Royal Bank of Canada 2017. All rights reserved.

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