Which Canadian account is designed to provide education savings with government grants?

• A. RESP
• B. RRSP
• C. TFSA
• D. RRIF

Answer: (A)

Saving for a child’s post-secondary education with government support is being tested. An RESP, or Registered Education Savings Plan, is designed for education funding and can receive government top-ups such as the Canada Education Savings Grant and the Canada Learning Bond. These grants boost the funds that grow inside the plan, and when you withdraw to pay for education, the money is taxed in the student’s hands, typically at a low rate because students usually have low income. The other accounts—RRSP, TFSA, and RRIF—are not built to provide education-specific grants; they serve retirement or general savings goals. Additionally, RESP contributions aren’t tax-deductible, unlike RRSP contributions, which adds another reason why the RESP is the vehicle specifically suited to leveraging government education grants.