RESP (Registered Education Savings Plan)

With the ever-increasing cost of education, saving is one way to ensure your children realize their full potential. A registered Education Savings Plan (RESP) is a great beginning.

Contributions earn investment income on a tax-sheltered basis, and for beneficiaries younger than 18 years old, contributions can be eligible for up to $500 per year in federal government Canada Education Savings Grants.

An RESP is called an ESP (Education Savings Plan) until it is registered with Canada Revenue Agency (CRA).

What types of plans are available?

Family Plans can have multiple beneficiaries and allow a child's parents, grandparents, great grandparents, or siblings to contribute.

Individual Plans have a single beneficiary. All family members (including aunts & uncles) and even friends can choose to designate a beneficiary whose designation is not restricted by age or blood relationships.

For both family and individual plans, contributors and beneficiaries are required to have a social insurance number.

How much can be contributed? The life-long contribution limit for each beneficiary is $50,000. There is no maximum annual contribution for your RESP. If your beneficiary is already age one, or older, he/she may be eligible to receive grants at a rate of $500 per year for each year he/she has been alive and a Canadian resident since 2007, and $400 per year for previous years in which he/she qualifies. We can help you customize a contribution schedule to maximize the amount of grants to which beneficiaries are entitled.A Registered Education Savings Plan, or RESP, is a special savings plan to help you save for a child's post-secondary education. With the rising costs associated with sending a child to college or university, an RESP can really help because the government provides grants while the savings grow tax-deferred until withdrawn. When the student withdraws the funds for educational purposes, the withdrawals are taxed in the student's hands, typically at a lower rate.

What are the benefits of RESPs?

1. Government grants helps the savings grow
To encourage saving for higher education, the federal and provincial government offers grant and tax incentive programs - without impacting your contribution room.
Learn the different grant programs.

2. Tax-deferred growth
You can contribute up to $50,0001 per child and there are no taxes payable on the money earned in an RESP until it's withdrawn. When RESP grants and earnings are withdrawn by the child for educational purposes, they are taxed at the student's generally low tax rate.

3. The sooner you start, the more you save

All a child needs to become the beneficiary of an RESP is a Social Insurance Number (SIN).

Contact us to see how an RESP can help you save to give your children the education they need to succeed.

 

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