Your child’s future depends on a good education and a solid financial security plan.
The Walton Financial Group in Barrie, Ontario can help create a Registered Education Savings Plan (RESP)
A Registered Education Savings Plan (RESP) is a special savings account for parents who want to save for their child’s education after high school.
How Does an RESP work?
The sponsor of the plan, usually the child’s parent or guardian, makes a contribution to the RESP. The government then contributes up 20% of that, up to a maximum contribution of $2,500 each year. That’s $500 in free money every year if you contribute the maximum. Known as the Canadian Education Savings Grant (CESG) this government money goes straight into the beneficiary’s RESP and is yours to invest as you please.
Why should you open an RESP?
1. Post-secondary educations are only getting more expensive. The average tuition for a four-year undergrad university program in Canada is now $27,300, and that doesn’t include accommodation and food, let alone other expenses. As part of the Maclean’s university guide, the magazine estimates the total annual cost of post-secondary education to be close to $20,000—or $80,000 over four years.
2. Free money! (see above). You could save for a child’s education with only your own TFSA, but you’d be missing out on the grants the government kicks into your child’s RESP.
3. The money you contribute and invest grows tax-free within an RESP.
When your child starts receiving payments from the RESP for school, the money will be taxed at their income level and their tax bill will be low.
How do you open an RESP?
With the sleepless nights that come with a newborn it can be hard to plan even one week in the future, let alone grappling with how to save up enough money for when that little bundle of joy heads off to college or university in 18 years. Fortunately Canadian parents have a powerful savings tool at their disposal: the Registered Education Savings Plan (RESP)
Below we’ll take a look at some of the most common questions people have about RESPs to help you get started. Call the Walton Financial Group in Barrie to arrange a meeting to get all these questions answered
Here’s what you’ll learn:
What is an RESP?
How does an RESP work?
What if you have more than one child?
Is there a contribution limit?
How do you get the RESP grant?
How should you invest an RESP?
How are RESPs taxed?
What if your child doesn’t go to school?
What if there’s leftover money in an RESP?
For more information about Registered Education Savings Plans, call the team at Walton Financial Group in Barrie, Ontario.
