Although Canadians enjoy free schooling up to grade 12, financing for your child’s post-secondary education can be a huge financial burden for parents and children alike. With rising tuition costs every year and rising education requirements in the job market, it is becoming more and more imperative to finance your child’s education as early as possible.

A Registered Education Savings Plan, commonly known as an RESP, helps you do that by building up a tax-sheltered fund so that parents can focus on their child’s education instead of their tuition. Furthermore, saving for your child’s education is promoted by the Government of Canada, who help you with special incentives (like the Canada Education Savings Grant) that are only available if you have an RESP. By saving as much as you can afford as early as possible, your tax-sheltered earnings in your savings can grow surprisingly quickly.

Features of an RESP

  1. RESP targets the average family. It’s designed to help parents systematically set aside funds each month for their children’s post-secondary education
  2. Anyone aged 14 and under may be the beneficiary (the child whose education the savings are targeted for)
  3. You may choose between a family plan (all or any one of your children registered may use the money), individual plan (for one child), or group plan (your regular savings are pooled for a group of children)
  4. The child (or children) receive(s) an income tax deferral on the investment income

How your money grows

  1. An education bonus of up to 15% may be credited at the end of the commitment period, depending on the plan and age of the child. This bonus is paid by the company and is included in the amounts paid as Educational Assistance Payments (EAP).
  2. You receive an additional government grant amounting to 20% of your annual contributions to the plan, up to $7200 in total ($500 per year)
  3. Your savings are further enhanced by an additional investment component, that generates a high interest for you
  4. You generate up to 44% growth on your savings, which quickly generates a substantial income for your child

What if my child does not continue education after high school?

If your child decides he or she does not want to pursue post-secondary studies, you have a number of flexible options:

  1. Defer taking out your funds, in the case that your child may decide to continue studying later
  2. Use the money to fund for a brother or sister, who will be continuing education after high school
  3. Transfer the funds to your Registered Retirement Savings Plan (RRSP) to contribute to your retirement needs
  4. Withdraw your savings, tax-free

Click here to contact us or receive more information about an RESP plan

 
4261 - A14 Hwy #7 Suite 239
Unionville, ON - L3R 9W6
Tel: ( 905 ) 471 - 5353
Fax: ( 905 ) 471 - 5451
Email: info@asmfinancial.ca
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