Things You Must Know About Canada’s Registered Education Savings Plans (RESPs)
In Canada, there’s a popular dedicated savings plan called RESP or Registered Education Savings Plan intended to help parents save for their kids’ education right after high school. Although RESPs, generally speaking, are opened to prepare for a child’s educational future, one can open for the benefit of another adult. If you are the one who opened the plan, you will then be referred to as the “subscriber.”
The moment your child goes up to post-secondary education, he or she can begin getting the benefits of his or her RESP through payments called EAPs or educational assistance payments. EAPs are literally made up of grant money from the government and investment earnings. The one receiving the EAPs is callled the beneficiary.
So, if you are living in Canada and is interested in RESP, here are the most basic yet important things you need to know about it; remember, the key is picking the right plan for maximum success.
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1 – One of the first things you must know about your savings in RESP is that they’ll grow tax free. Simply put, as long as your investment earnings are staying put in your plan, it means they won’t be subjected to taxes.
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2 – It also is worthy of mention that if the child is under 17 years old, it means that he or she will be protected by the government by way of putting money into the RESP, which by the way is presented as either bond or grand.
3 – You must likewise take advantage of the fact that you have the ability to put money in every single time you want and the lifetime maximum is $50,000, at least for the most part. 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 – Also, know that contributions aren’t tax deductible, too. You also must know that you actually have the right to withdraw them tax free from he plan should you wish to.
5 – It may be true that you are relatively new and unfamiliar with this type of program, but understand that it’s never really a difficult decision to make because you have so many different investment options available, including bonds and stocks, mutual funds, and GICs.
In the end, you simply must understand and recognize the fact that with the sheer number of available plans out there, it means you can pick something that should be flexible enough for you to weigh on your options and figure out which of them have a good potential of converting your savings investment into success.