What You Need to Know about Registered Education Savings Plans (RESPs) in Canada
RESP or Registered Education Savings Plan is a popular child’s educational option available in Canada for families who need support for their kids’ future after high school. Though RESPs in general are known to benefit children, anyone in this country can actually open one with an adult as beneficiary. Now the person who opened the plan will now be called as the “subscriber.”
Once your child levels up to post-secondary education, what happens is that they can begin taking advantage of their RESP by way of taking payments referred to as EAP or educational assistance payment. By definition, EAPs are comprised of investment earnings as well as grant money from the government. The one receiving the EAPs is callled the beneficiary.
Therefore, if you happen to be residing in Canada and you are hoping to learn more about RESP before you avail of it, then you’ve come to the right place since we have all the basic information you need to know.
Finding Ways To Keep Up With Plans
1 – First things first, your savings actually will grow tax free. In other words, so long as your investment earnings stay in the plan, it means it never will be subjected to tax.
Looking On The Bright Side of Resources
2 – Next, know that if you save for your kid who’s 17 years old or younger, it means that the government is obliged to put money into the RESP, which in turn is classified later on as a grant or bond.
3 – Furthermore, you have the right to put money whenever you want and the usual lifetime maximum is usually around $50,000 per kid. However, it’s expected that something will always be expected, and in this case, it’s the fact that some plans will require subscribers like you to come up with regular monthly contributions.
4 – It also is interesting to know that contributions aren’t also considered as tax deductible. You however can withdraw them from the plan whenever you want and it will be tax free.
5 – There is no denying that you’re quite new to this type of educational plan, but the good news is that there really are more than a handful of investment options made available for those hoping to get RESPs, including bonds, mutual funds, GICs, and stocks.
At the end of the day, you just have to learn that many of the available plans out there are flexible enough to allow you to make that all important decision of investing your savings.