Your child has started going to school. Have you started the RESP? In September, schoolaged children start their school year and grown up students join post-secondary education. Since the cost of education in Canada is quite high, in order to ease the financial burden of parents, the government has designed a unique educational savings program namely RESP. Parents who intend to save for the post-secondary education of their children can take advantage of this wonderful savings initiative of the government.
Who is RESP meant for?
RESP is an immensely beneficial/wonderful way to help you save for the postsecondary education of your children. The funds invested/ accumulated through RESP can be used to pay tuition fee and other financial barriers of post-secondary education including residence, school supplies, food, and travel. Like RRSP, the funds invested in RESP grow in a tax-sheltered manner until the time you withdraw the money to cover educational expenses.
Who can open RESP?
Parents, grandparents, maternal uncle, paternal uncle, maternal aunt and friends. Anybody can open RESP account for a child, and the same child can be the beneficiary of multiple RESPs.
Who can be the named beneficiary?
You can name any child as your beneficiary and you don’t need to be related to the child.
After the plan comes into force, you still have the option to change the beneficiary. As per the age of the new beneficiary, you can continue contribution within the duration of the policy.
How much money can you save?
The maximum lifetime contribution limit per child is $50,000 while there isn’t any annual contribution limit. This implies that as per your budget, you can invest up to $50,000 in the plan.
To encourage parents to invest funds in post-secondary education of their children as early as possible, the government of Canada has devised CESG plan.
CESG in a Glimpse:
Annual Grant: 20% of your annual contribution. Contribution Limit of Annual Grant: $500 total lifetime Limit per saving (per Beneficiary): $7,200
Some provinces offer their own Grant programs in addition to CESG. The federal and provincial governments contribute the grants directly into the RESP, and these additions within your contribution can significantly increase your savings.
If your child doesn’t want to study further, how can you utilize the funds?
If your child doesn’t wish to continue his post-secondary education, then you can:
1. Nominate a new beneficiary.
2. Take back/withdraw the money.
3. Transfer the funds into your RRSP account.
4. Donate the funds to an educational institution.
We are happy to announce that we are celebrating 13 successful years of Punjab Insurance. To commemorate this occasion, we have organized a free contest on Lohri Festival in which you can win a total cash prize of $5,000. On January 13, 2020, there will be 5 draws with $1000 cash prize for each of the draws. To participate, you don’t need to purchase a plan. Simply go to our website and register your kid’s name in the contest.
As an independent insurance advisor working through Punjab Insurance Agency, Sandeep Ahuja I deal with different insurance companies offering plans for different types of insurance. I can explain to you in detail, the insurance plan options and coverage that are suitable for your needs and resources. Besides, I can also help you to purchase mortgage insurance, super visa insurance, disability insurance, critical illness insurance, extended medical plans, group medical plans, RESP, RRSP, travel insurance, TFSA accounts, health and dental plans along with estate planning suitable for your needs and resources.
This article is © Copyrighted 2019- 09-25 and can be reproduced only with prior permission.