Let's be honest: few things make eyes glaze over faster than a string of capital letters. RESP, RDSP, HBP, FHSA… it sounds like someone sat on a keyboard. But hiding behind those letters is real money, some of it put there by the Government of Canada. So grab a coffee ☕ and let's decode them together.
A Registered Education Savings Plan (RESP) helps you save for a child's education after high school: college, university, an apprenticeship or a trade program. Parents, grandparents, other relatives and friends can all open one.
The fun part is the government money:
What about Ontario? Right now, Ontario doesn't offer its own RESP grant (British Columbia and Québec do), so Ontario families rely on the federal CESG and CLB.
Contributions don't come with a tax deduction, but the growth isn't taxed while it stays in the plan. When the student withdraws the grants and growth for school, that part is taxed in the student's hands, and students often have little other income. The lifetime contribution limit is $50,000 per child.
A Registered Disability Savings Plan (RDSP) helps a person with a disability, and their family, save for the long term. To open one, the beneficiary must be approved for the Disability Tax Credit (DTC), be a Canadian resident with a Social Insurance Number, and be under 60 (it can be opened until the end of the year they turn 59).
The government help here is generous:
The 10-year rule: an RDSP is built for the long haul. If money is withdrawn, grants and bonds paid into the plan in the previous 10 years may have to be paid back, generally $3 for every $1 withdrawn, up to that 10-year total. So timing matters.
Contributions aren't deductible and come out with no tax. The grants, bonds and growth are taxed when they're paid out to the beneficiary.
The Home Buyers' Plan (HBP) lets first-time buyers withdraw up to $60,000 from their Registered Retirement Savings Plan (RRSP) to buy or build a qualifying home, with no tax on the withdrawal. (The limit rose from $35,000 for withdrawals after April 16, 2024.) A couple buying together can each use it, which means up to $120,000 between you.
The catch: it's a loan to yourself. You pay it back to your RRSP over up to 15 years. Normally repayments start in the second year after your first withdrawal. Under temporary relief, if your first withdrawal is between January 1, 2022 and December 31, 2028, repayments start in the fifth year instead. For example, a first withdrawal in 2026 means repayments start in 2031. Any amount you don't repay in a year gets added to your income for that year.
The First Home Savings Account (FHSA) is the newest kid on the block, and people love it because it gets a tax break going in and coming out.
We're an insurance agency, so we don't sell mutual funds, stocks or bank products. What we can do is talk you through insurance-based options that may be available in some registered plans, such as segregated funds held in an RRSP. If an insurance-based option isn't a fit for a particular account, we'll tell you that too.
And here's the part people often forget: these plans work because someone keeps contributing. Life and disability insurance can help keep a family's savings plans on track if life throws a curveball. It's worth a quick look while you're setting things up.
Whether you're starting an RESP for a new baby, opening an RDSP for someone you love, or dreaming about that first set of keys, we're happy to walk through it with you, no jargon required.
