“ I Want to Give My Child or Grandchild a Head Start”
RESP (Registered Education Savings Plan)
What it is and how it works?
Happy Wednesday,
Let’s revisit an important investment vehicle that many are familiar with, but is worth a refresher.
To put simply, an RESP is a long-term investment strategy designed to let family members and friends help pay for a child’s education.
With the high cost of post-secondary education, many parents and other family members recognize the need to save for education well before the expenses become a reality. That’s why the registered education savings plan (RESP) is such a popular savings vehicle.
Money can be contributed at any time to an RESP– up to a lifetime total of $50,000 per child. These contributions are not tax deductible, but any investment income that’s earned within the plan isn’t taxed until it's withdrawn. In addition to tax-deferred growth, the federal government will also automatically contribute a Canada Education Savings Grant (CESG) of 20% of what you put in, up to $500 per year – to a lifetime maximum of $7,200 for each child. If your family income is low, you can receive an even higher amount.
The attached article discusses the RESP in more detail- including how to set up an RESP, government incentives and saving strategies involving RESP’s.
Topics covered:
- What is an RESP?
- Contributions to an RESP
- Who can be a subscriber?
- Who can be a beneficiary?
- Types of Plans
- Transfers between RESP’s
- The Canada Education Savings Grant (CESG)
- Canada Learning Bond (CLB)
- Additional government incentives
- Opportunities and constraints for grandparents
- Investment Options
Please let us know if you would like to discuss or if you would like to open or contribute to your RESP.
Regards,
Kristine
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