Registered Education Savings Plans
Post-secondary education is vital to securing an excellent job in today’s economy. Over the past few years, the cost of education has grown significantly. Living away from home can cost more than $25,000 yearly for university education.
RESPs are an investment vehicle to save money for your loved one’s education. The Canadian government introduced the RESP to let parents save money for their kids’ education. The main benefit is that the money in an RESP grows tax-free until the beneficiary is eligible to use it.
Many other benefits are:
- Ability to access your funds tax-free.
- Tax-sheltered investment growth.
- Ability to transfer funds to RRSP or another beneficiary if your child chooses not to pursue post-secondary education.
- It gives your child a head start in repaying their education loans.
The lifetime maximum contribution for an RESP is $50,000 per beneficiary. The funds must be retired 35 years after the plan was initiated. There are no age limits for individual RESPs, although the final contributions to a family RESP must be before the beneficiary’s 31st birthday.
Click on the following link for a short video explaining RESPs
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