Post-secondary education is one of the best gifts you can give to your child. As a parent, you are obliged to plan on how best you can finance your child’s college education. A registered education savings plan (RESP) is a valuable tool towards financing your child’s education. The best thing with this account is that the fund is sheltered from taxation.
Who ought to consider an RESP?
Any parent/guardian concerned about the future of his/her child
Benefits and characteristics of an RESP
- An RESP requires the subscriber to be related to the beneficiary by blood or adoption
- There are no restrictions on you and the child. It can be your niece, nephew, grandchild or your own child
Other benefits include;
- You are allowed to change the plan beneficiary
- The beneficiary enjoys a tax deferral on his or her investment income
- It protects your invested capital up to over 100% against financial market fluctuations
- With an RESP, you can apply for a government grant or up to $7,200, or 20% of your total annual savings to the plan (worth up to $500 annually)