- An RESP is a flexible and convenient way to save for a child’s future post-secondary education.
- Investment income generated in an RESP is tax sheltered as long as it remains in the plan.
- Government grants may be available to qualified student beneficiaries to help RESP savings grow.
- There are no annual fees outside of the management expense ratio (MER).
- A segregated fund contract offers protective features, including death benefit and maturity guarantees.
- When withdrawn, plan growth and government grants can be taxed at the student’s tax rate (he or she could pay little or no tax on this money).
How does it work?
Types of withdrawals
Student Beneficiary enrolls in post-secondary education
|Post-secondary Education (PSE) contribution withdrawal||RESP contributions||Returned tax-free to Subscriber|
|Educational Assistance Payments (EAP)||RESP earnings, CESG, and other incentives||Taxable to Student Beneficiary at his/her marginal tax rate|
Student Beneficiary DOES NOT enroll in post-secondary education
||Returned tax-free to Subscriber|
|Accumulated Income Payments (AIP)
||Earnings on contributions, grants, and incentives
||Paid to Subscriber and taxable at his/her marginal tax rate, plus an additional 20% tax|
CESG: unused grants returned to government; no tax consequences. CLB: returned to government; no tax consequences
Explore our segregated funds
This is for general information only and should not be considered investment or tax advice to any party.
The Manufacturers Life Insurance Company (Manulife) is the issuer of insurance contracts containing Manulife segregated funds and the guarantor of any guarantee provisions therein. Manulife Investment Management is a trade name of Manulife.