Registered Education Savings Plan

Living in Kitchener and worried about your child education cost? Go for RESP. Registered Education Savings Plan or RESP is a tax-sheltered plan that offers you to save for your children higher education

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Registered Education Savings Plan

Living in Kitchener and worried about your child education cost? Go for RESP. Registered Education Savings Plan or RESP is a tax-sheltered plan that offers you to save for your children higher education. The cost of post-secondary education is too high and thus many parents and grandparents take this opportunity to save for giving their children or grandchildren the right education that they deserve.

Opening and contributing to an RESP

You can set an RESP for any relative, be it your children, grandchildren, nephews, nieces or other family friends. You will be considered as the ‘subscriber’ to the plan if you open the plan and contribute to it. You will have the right to set the beneficiaries who will get the benefit of the plan during their post-secondary education. To get this facility the beneficiary must be a Canadian citizen and should have Social Insurance number.

You can contribute any amount to the RESP opened by you; however, there is a lifetime contribution limit for each beneficiary and it is $50000.

Benefits of an RESP

When you open an RESP you can combine tax deferral, flexibility and government assistance for your children post-secondary education. Reasons that makes it great choice among Canadians are

  • RESP is considered as tax deferral that means that the investment growth earned and the interest income within the RESP are not taxed for the period the fund is within the plan. Once the fund is withdrawn, the student who utilises it will be taxed. Normally a student will be paying very little or sometimes no taxes at all.
  • Another benefit derived from RESP is Canada Education Savings Grant or CESG. With this, the government will match 20% on the first $2500 that is contributed by you annually towards RESP. a beneficiary will be eligible for the period till they turn. Government will give a maximum of $7200 per beneficiary till they turn
  • It gives the parents an opportunity to save for their child post-secondary education where they too can save something on taxes.

Hence, when you are planning for future of your children and their higher education it is the best way to plan it. With it, you get the opportunity to help other students among your friend or family about whom you think that they have the prospect.

Take these plans from an expert agency who will explain to you about all these intricacies in details.