Registered Education Savings Plan (RESP)- A Special Savings Scheme for Parents for Their Child
The expense of higher education continues to rise in Canada. It is a reason for which many young people graduate with significant student debt. It happens due to taking a massive educational loan. If you’re trying to alleviate the financial strain by paying for some or all of a child’s post-secondary education, it’s critical to make the most of every dollar saved. Are you staying in Canada and worried about your child’s post-secondary education? A registered Education Savings Plan (RESP) is the best option you are searching for! The Canadian government sponsors a Registered Education Savings Plan (RESP) to encourage investing in a child’s future education.
Certain education savings plans provide more benefits than a regular savings account. A registered Education Savings Plan (RESP) is a government-sponsored saving strategy that can help you make the most of your education savings with tax advantages. The most interesting part of it is that the contributor will get a matching contribution from the government as well. The primary drive of registered education savings plans in Canada is to encourage saving for post-secondary education.
It is a good idea to have a separate savings account for a major financial goal like post-secondary education. Why? Some parents end up having to funnel a large amount of their budget to pay for the post-schooling. They find themselves in a situation where their child is attending college or university. With a fully-funded registered education savings plans in Canada, there will hardly any financial burden on the parents- once the child starts post-secondary education. it would be ideal for the parents to avoid any debt while their kids are in school. Students can continue to study hard in class while still participating in sports or other activities.
The person who opens and contributes to a registered education savings plan in Canada is known as the subscriber. It can have either joint or sole subscribers. Two parents of a child, for example, can open a joint account to save for their child’s education. Parents and family members are not the only ones that contribute to RESPs. Anyone, including parents, grandparents, godparents, and others, can contribute to a registered education savings plan in Canada. The plan’s benefits will only go to the child who has been chosen as the beneficiary. Any youngster who is a Canadian resident is entitled to participate in an RESP.
There is no limit to the number of RESPs that one beneficiary can have. The sole restriction is that aggregate plan funds for one recipient cannot exceed $50,000. Subscriber contributions are not tax deductible as well. The Canada Education Savings Grant (CESG) allows the government to contribute to RESPs. The government matches at least twenty percent of contributions, up to $500 per beneficiary. It seems like the biggest benefit you can enjoy. IF the beneficiary of the account doesn’t use the funds, then the contributor receives back the money they contributed and it is tax-free.
Registered education savings plans in Canada are an excellent way to fund your child’s education. Make sure your finances are in good order, and then start contributing. Contact CHAHAL INSURANCE INC if you are planning to open up a RESP for a child under the age of 17!
Comments
Post a Comment