For those of you that are regular readers (thank you!), you know that I am a firm believer in Registered Education Savings Plans (RESP) for your children or grandchildren. I do not have any investment on my product shelf that guarantees a 20% return on funds invested before I even start to do my part of the job. It is a great tool for helping your child or grandchild pay for their education down the road.
A few weeks ago, I posted a refresher about RESPs (READ HERE) and the feedback was mixed, so I thought I would circle back and explain RESPs in simpler terms.
Because we are approaching December (!) and the end of the year, I also thought that in addition to providing a quick refresher about RESPs, I could gently remind you that that there is still time, if you have not maximized your contributions, to take advantage of that 20% government grant in the same post.
As a reminder, an RESP is an investment program where the Government matches 20% of your contributions. You could even qualify for additional Grants based on your family income. There’s also the Canada Learning Bond where the Government offers up to $500 for low-income families.
Start Early
Families with young children can benefit the most from the RESP. That’s because they will have more time to qualify for Government Grants, which can be maximized by contributing to the RESP each year. Don’t worry! If you miss a year, you can catch up for one year at a time.
Family Time
If you have more than one child, you can open a Family RESP. It allows you to keep your savings in a single account, it simplifies managing the investments, and if one child doesn’t go to school, a sibling can use their Government Grant money without penalty (up to a maximum of $7,200 per child).
Paying for Education
Most post-secondary programs qualify for educational withdrawals: academic programs, skilled trade programs, full-time programs and part-time programs. Studying abroad also qualifies!
Top Up
If you haven’t yet maximized your RESP contribution for the year, you can still make a deposit before the end of December. I can help you calculate the optimal amount to contribute for this year, or as a regular monthly deposit. You can email reach me here: BOOK KBH
I hope that helps clear up the rules about RESPs a little better.
THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.