Don’t let your child’s education fall by the wayside – start saving with an RESP today!
RESPs (AKA Registered Education Savings Plans) are an excellent way to ensure that your child receives the education they deserve, and it’s never too early to start saving! But what exactly are RESPs? What are their benefits?
Here’s everything you need to know about Registered Education Savings Plans, from government grants to tax savings, so you can start your child on the path of a great education today!
What is an RESP?
A Registered Education Savings Plan (RESP) is a government-registered savings plan to help you save for a child’s post-secondary education. The money in the account grows tax-free until it is withdrawn to pay for the beneficiary’s qualifying educational expenses.
Why should you invest in RESPs?
There are many benefits of opening an RESP for your child. For one, you can receive government grants to help boost your savings. Plus, the money in the account grows tax-free, which means more of it will be available to pay for your child’s education when they’re ready to head off to college or university.
To know more about why you should invest in a RESP, refer to our detailed blog.
Where can you set up RESPs?
You can set up RESPs through most banks, credit unions, and investment firms. You can also set up RESPs through scholarship plans offered by some provinces.
Talk to our financial advisors to know more about how you can set up a RESP.
How do you sign up for RESPs?
You can sign up for an RESP by simply talking to a licensed financial advisor. S/He will likely have you fill out some paperwork and may require a small deposit to get started. Once you’ve opened your account, you can begin contributing to it at any time.
Are there any penalties to using an RESP early?
When it comes to RESPs, there are definitely some rules you’ll want to follow in order to avoid any penalties. Withdrawals made before a child is enrolled in a qualifying educational program are subject to a 20% penalty, so it’s important to only use the money when you need it.
You also don’t want to over-contribute to your RESP – doing so will result in a 1% per month charge on the excess amount. Keep these things in mind and you’ll be able to take full advantage of this great savings tool!
Fees and other expenses involved with RESPs
When you contribute to an RESP, the government will give you a grant of 20% on the first $2,500 you save. That means if you save $2,500 in an RESP, the government will give you a grant of $500. The money in your RESP grows tax-free until it is time for your child to go to school.
When they do, they can take money out of the account and use it to pay for their tuition, books, and other education-related expenses.
Don’t wait – start saving with an RESP today!