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RESP

Why option for an RESP?

When aiming to aid your children in realizing their aspirations for a prosperous future, financial support becomes pivotal. An effective means to bolster their financial future is by initiating and contributing to an RESP.

 

Understanding RESP:

A Brief Overview If you’re new to investing, an RESP (Registered Education Savings Plan) is a tax-deferred, government-supported investment scheme crafted to save for a child’s future education. Typically initiated by parents for their children’s post-secondary education, it can also be opened for oneself or other adults.

Why consider an RESP?

  • Extended Duration: An RESP can remain open until the child reaches 35 years, offering flexibility if they don’t pursue post-secondary education immediately after high school. Should the child decide against pursuing higher education, the funds can be returned, with contributions refunded to contributors and grants returned to the government.
  • Open Contribution: Anyone can contribute to an RESP once it’s established, including grandparents, parents, godparents, uncles, and aunts. Tax benefits apply to all contributors.
  • Investment Choices: Various investment options are available, allowing customization based on risk tolerance and time horizon. Providers offer options like stocks, bonds, and mutual funds.
  • Educational Assistance Payments (EAPs): Upon the child’s confirmation of enrollment in post-secondary education, they become eligible for EAPs. These payments, derived from investment earnings and grant money, are taxed in the hands of the student. Withdrawals can be made by either the student or the parent, with the named beneficiary receiving the EAPs.
  • Tax-Free Growth: Investment earnings within the RESP are tax-free until withdrawn. However, once withdrawn, any interest accrued is taxable to the child.
  • Government Grants: Federal government grants are available for RESPs of lower-income families, with potential eligibility for provincial grants as well.

 

The student must provide proof of acceptance from a post-secondary institution. Upon submission of the necessary documents, funds will be disbursed to cover post-secondary expenses and educational costs.

Opting for an RESP offers peace of mind and security, ensuring a solid foundation for your children’s future education. It provides them with the best opportunity for a successful future.

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