Data About The RESP Can Help
As a Canadian parent in the 21st century, one of the factors you may be concerned with is how to save for your child or children’s college education. With the cost of tuition, books, room and board and other factors, post-secondary education can be expensive for a parent. However, an RESP can help. The Canadian Registered Education Savings Plan is a Canadian government tax-free savings plan that gives parents a way to save for their child’s post-secondary education or, in other words, any education after high school. This would include saving for college, trade schools or graduate school expenses.
Once the child is ready to use the funds, they become taxable under his or her name. However, these taxes are often extremely low due to a student’s income and tax status. If withdrawals are made to the contributions before they are needed for the child’s post-secondary education, these withdrawals are taxed free because they were invested with after-tax funds.
Who Can Open an RESP?
This is a fund that can be opened by any Canadian who is interested in saving for a child’s post-secondary education. This would include parents, guardians, grandparents, relatives, or friends.
What Happens When You Contribute to an RESP?
The person who contributes to an RESP becomes eligible for grants by the Canadian government. Your funds can be matched by the government up to certain amounts in some cases
What Are Some Requirements?
You and the child must be Canadian citizens and have a social insurance numbers for the plan to begin. Although there is no requirement that funds must be deposited annually, the lifetime contribution can be no more than $50,000 per child, and that includes combined funds opened for a child by different people.
More Tips About RESP
Because this kind of fund is tax-free, you can protect your investment from taxes and know exactly how much is present in the resource as you watch the fund grow for your child.
You are encouraged to open an RESP as soon as the child is born so that you can maximize the number and amount of funds you can contribute. Although you can withdraw from the fund before post-secondary education begins, it’s best to leave the funds alone and let them grow to their potential if possible.
To learn more about the RESP, check the Government of Canada website or Canadian bank websites.