RESPs are a Uniquely Canadian Way to Save for Education
The RESP offers Canadians an incentive unlike any other in the world. Tax advantages and government incentives are available to encourage saving for education — and yet only half of eligible children are accessing the benefits. At Knowledge First Financial, we know that RESPs make a huge difference to students. Not only does an RESP ease the financial burden, it empowers students to focus on their studies to unlock the potential that education can bring.
THE BENEFITS OF RESPS
Pay for your child’s education now and putting aside a little money each year helps to ensure they have access to funds to attend a postsecondary program when the time comes. Here are the benefits of opening an RESP when your child is young to assist with education savings:
• Compound growth: As soon as your child is born, you can start saving for their education using RESPs — up to $50,000 for each child. You can contribute regularly, at a rate that fits within your budget, and you’ll have access to the funds when it’s time for your child to attend college or university.
• Tax savings: When it comes time to withdraw funds to pay for your child’s post-secondary education, the government contributions and earnings are taxed in the child’s name, and since the child is a student, there will be little or no tax to pay.
• Tax-deferred growth: All investment income generated from an RESP is tax protected as long as the funds remain in the plan.
• The Government makes contributions: Through the Canada Education Savings Grant (CESG), the federal government will add 20% to your annual RESP contributions (up to a maximum of $500 per child, per year). There is a $7,200 lifetime limit per child.
• Access to Canada Learning Bonds (if you qualify): Those qualifying for the National Child Benefit Supplement can qualify for a Canada Learning Bond, providing your child with a $500 initial grant into an RESP, and $100 per year until age 15, for a total of $2,000 lifetime per child.
Remember, by contributing early in your child’s life you’ll receive government grants sooner and your savings will have more time to grow. Although starting early will help you save more in the end, saving something is the most important thing of all.
For more information, visit knowledgefirstfinancial.ca