RESP

With children, there are a thousand reasons to hope. And also a desire to provide them with everything they need to succeed personally and professionally.

Registered education savings planscommonly known as RESPs, are the best financial vehicles for saving for a beneficiary‘s post-secondary education. As with RRSPs, the Federal Government lets you accumulate investment income on a tax-sheltered basis until you withdraw the funds from your plan. In short, RESPs are what RRSPs are to retirement!

There are few eligibility criteria to open an RESP for the child. The child (beneficiary) must be a resident of Canada, have a social insurance number, and be under 18 years of age. The advantage Registered Education Savings Plans (RESPs) have over other investments is that the Canadian Government will add a yearly grant of 20% on top of your investment money. The maximum grant is $500.00 per year, attained with an investment of $2,500.00 per year. The full grant over the lifetime of a Registered Education Savings Plan (RESP) amounts to $7,200.00 of government money for each child. The cumulative contribution limit per beneficiary is $50,000. That means that a parent and a grandparentfor example, can both subscribe to separate RESPs for the same beneficiary. By making sure they do not exceed the total allowable maximum, they avoid paying penalty taxes.

RESPs must be fully liquidated no later than the beneficiary‘s 35th birthday, and contributions can be made up to his or her 31st birthday.

Funds deposited in Registered Education Savings Plans (RESPs) grow tax-free. When the beneficiary attends a post-secondary institution, the student‘s income tax rate is applied, most likely at a rate much less than that of the contributing adult (the subscriber). The subscriber’s financial institution makes investment decisions.

Should the beneficiary decide not to attend a post-secondary institution, the Registered Education Savings Plan (RESP) funds can be transferred to a brother or sister under 21. The subscriber may transfer the funds from an RESP to a Registered Retirement Savings Plan (RRSP) – to a maximum of $50,000.00. The funds may also be transferred to a spousal RRSP. In such cases, the grant portion of the RESP money is returned to the Canadian Government.

When the beneficiary enrolls in a post-secondary institution as a full-time student, the RESP can begin making payments to the student. Payments can go towards the student‘s tuition, books, accommodations and transportation.

If you want to set up and have a question regarding the new RESP or you already set up the RESP and would like us to review it, we can help you with that. The return rate makes a significant impact on the RESP plan, so review your semi-monthly statements carefully and make the adjustments in funds if necessary to get maximum return on the investmentTry to open the RESP without the enrolment fee, which is charged upfront to the RESP plan. again to open an RESP without an Enrolment fee and desire to have a better return feel free to Contact Pankaj Bhatia at 647 640 2222