How does RESP help for your Kids Education
Set your child up for a successful future with an RESP.? With prices of post-secondary education making some students hold their breath, why not give them an extra boost of confidence by having some financial worry taken away.
What is a RESP, what does it do?
A RESP is a Registered Education Saving Plan. It is a Flexible, Government-Assisted, Tax-Deferring Investment, where anyone can contribute once it’s opened. Parents, Guardians, Grandparents and other friends and family can contribute from the time the RESP is opened, until the child is 18-years-old. The RESP can be opened for the future student from the time of birth, till 14 years of age. You can contribute up to $50,000, and you can choose to do it all at once or spread it out over a period of time.
Once the student is ready to continue with post-secondary education, all he or she needs to start accessing the RESP funds are two things. A Social Insurance Number, and proof of acceptance from a post-secondary institution are necessary, then funds can be released. If the RESP received any grants from the government, that money will already have been deposited in the fund.
EAPs, or Educational Assistance Payments will begin when the student is enrolled in post-secondary education. These payments are part of the RESP, mostly from the grant money and investment earnings. Parents or child can withdraw money, but the tax on the EAP is only payable by the student.
There are tax benefits that come with RESPs, and all contributors get tax benefits. The value withdrawn from insurance will not be taxed until it exceeds the amount put into the fund. All interest payments, dividends, and capital gains earned in an RESP are not taxable.
What happens if the child doesn’t go?
If your child decides to wait, or simply take time choosing what to do, don’t worry. There is no rush. The child doesn’t have to go to post-secondary education right away either. The money will get returned to the financial institution, and will distributed back to the contributors. Grants would not be redeemed and returned to the government.
So, how does an RESP help your child’s education? It helps by giving the child a financial boost when it comes to the challenges of affording education. An RESP sets the student up to get the education to create a bright future.
Securing your child’s future with a RESP is a wise investment that can provide them with the financial support they need to pursue their dreams. With the right strategy and guidance from a trusted financial advisor like Harpreet Puri, you can make your child’s education goals a reality. Start planning today!