Registered Education Savings Plan (RESP)
With the cost of living on the rise and tuition fees steadily increasing, paying for you children education is becoming more and more expensive. Although you might think time is on your side, most parents don’t realize the severity of the problem until it’s too late
For those who can’t afford the costs of sending their kids to post-secondary institutions, there is a solution: saving for their education.
Registered Education Savings Plan, or RESP, is a saving plan sponsored by the Canadian government that encourages investing in a child’s future post-secondary education. RESP is probably the most effective means to invest in your children’s future and ensure their access to higher education.
Invest in Your Children’s
Give your children the chance to pursue their dreams. Registered Education Savings Plan helps parents, grandparents, relatives and even friends save towards children’s future post-secondary education. The contributions made build-up tax-free until it’s withdrawn.
The government adds a Canada Education Savings Grant – CESG – of 20% of your annual contribution, up to $500 per year. Families with lower incomes receive a higher grant from the government. However, eligibility rules change and are dependent on each year’s budget, so it’s better to consult with an insurance professional to determine if you are eligible for a government grant.
If the beneficiary doesn’t continue studies, you can choose to change the grantee or transfer up to $50,000 of the funds accumulated to your Registered Retirement Savings Plan (RRSP).
There are two types off RESPs available:
- Family RESP plans
- Individual RESP plans
A family RESP plan allows you to name one or more children as beneficiaries with the condition that you are related to them. Children, grandchildren, siblings and adopted children are fully eligible for this plan.
An individual RESP plan can be opened by anyone, regardless of their connection with the family. You can set up a RESP policy for yourself, your friend or another adult.
Benefits of RESP
- Plan your children’s education;
- Benefit from a federal government grant equivalent to 20% of your annual contribution;
- Guaranteed savings growth in a tax-deferred environment;
- A single beneficiary can have several subscribers;
- No registration fees;
Start Saving for Your Children’s Education
Access to higher education is probably the most valuable gift you can make to your child, grandchild, niece or nephew. HTD Financial Solutions is working to help Canadian families learn more about how to set up a Registered Education Savings Plan. Our team of insurance professionals will work directly with you to help you find the right plan for your specific needs.