The top 5 benefits of a Registered Education Savings Plan (RESP)
A Registered Education Savings Plan (RESP) is a savings plan specifically designed to help you save for your child's post-secondary education. Here are the top five benefits of an RESP:
Government grants: When you open an RESP, you may be eligible to receive government grants to help you save for your child's education. The Canada Education Savings Grant (CESG) provides an additional 20% on the first $2,500 you contribute to an RESP each year, up to a maximum of $500 per year.
Tax-free growth: The money you contribute to an RESP grows tax-free until your child is ready to withdraw it for their education. This means that you won't have to pay taxes on any interest, dividends, or capital gains earned on your investments.
Flexibility: An RESP allows you to choose how and when you contribute to your child's education savings. You can make regular contributions or make one-time payments, and you can choose the investments that are right for your savings plan.
Educational assistance payments: When your child is ready to go to post-secondary school, they can start withdrawing the money from their RESP. These withdrawals, called educational assistance payments, are taxed in the hands of the student, which is typically at a lower tax rate than the person who made the contributions.
Lifelong learning: An RESP can be used to fund post-secondary education at any accredited institution, including universities, colleges, and trade schools. It can also be used for full-time or part-time studies, and for certain programs that lead to a professional designation, such as law or engineering.
In conclusion, an RESP is a great way to save for your child's post-secondary education.
The government grants, tax-free growth, flexibility, and educational assistance payments make it an attractive savings option. Plus, it can be used for lifelong learning, so it's a valuable investment in your child's future.