Have you spent sleepless nights planning on how to save money for your little bundle of joy who will head off to college or university in the future? Thanks to the Canadian government, who designed the Registered Education Savings Plan (RESP), encouraging investment in a child’s future post-secondary education.
RESP is nothing but the best investment plan for child’s future. An experienced and best RESP provider in Ontario, GTA can help you out in case you don’t know whether you can afford to make contributions. Enjoy sweet tax breaks in the process of saving money for your child’s education.
There are three types of RESPs:
Parents and Grandparents can open an individual plan but only one beneficiary can be named. In case the beneficiary decides to discontinue their education after high school, one may be able to name another beneficiary. The lifetime limit is $50,000 per beneficiary.
Family RESP –
If you’ve more than one child, this plan is ideal for you. You can have one or more beneficiaries who have to be related to the contributor. The beneficiaries have to be under the age of 21 when they’re added to the plan.
Group RESP –
The plan is open for one child who doesn’t have to be related to you. A group plan is a good option because it allows you to make regular payments throughout the term of RESP. Here, savings are combined with other people. The lifetime contribution limit is $50,000 per beneficiary.
What should you know about Registered Education Savings Plan in GTA?
Tax-Sheltered Account –
Thousands of taxes can be saved when investing in Canada Registered Education Savings Plan, which is why it is a tax-advantaged account. Your savings can grow faster.
Government Grants –
Through your Canada Education Savings Grant, the federal government adds to your RESP savings every year. If you live in Quebec, Saskatchewan, and Alberta, you may also be eligible for a provincial grant.
Variety Of Investment Choices –
Different providers offer different investment options, you can choose investments that best suit your needs.
Family Can Contribute–
Anyone can set up individual RESP. Your child’s RESP can grow with contributions from the family.
The Canada Registered Education Savings Plan can stay up to 36 years. Accounts for beneficiaries eligible for the disability tax credit can stay open for 40 years.
What is the RESP Contribution Limit?
One can contribute as much as they want to an RESP. But under the current law, one can contribute a lifetime maximum of $50,000 per beneficiary to an RESP.
But what if your child doesn’t go to school? Don’t worry. If your little one decides not to go to college or pursue any other qualifying program, you have an option. You can transfer the money to another child if you have a family plan. If you’ve maxed out your contribution, which is $50,000, you can withdraw without penalty. All grant money is returned to the government, and the capital gains, income from interests are returned to you as an Accumulated Income Payment (AIP).
The Canadian education savings plan can be alluring, but going into it without knowing your contribution limits, savings goals, and withdrawal expenditure can impinge on your future. Get in touch with the best RESP provider in Ontario, GTA to plan wisely to gather perks of tax-free compounding. Remember, the RESP is a saving plan for child education needs.