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Education Saving

Back-to-School Is the Best Time to Think About RESPs

Another summer has quickly come to an end and that means one thing: your kids are back in school! Just like spring is a great time to consider spring cleaning, the back-to-school season is a great time to start thinking about your child’s post-secondary education (PSE) & the benefits of investing in a Registered Education Savings Plan (RESP).

Why is back-to-school such a great time to think about RESPs? The start of a new academic year means your child is one step closer to starting their PSE. Whether you’ve started to save or not, there are many reasons to invest in an RESP.

With it, parents are able to provide financial stability to their children while teaching them about financial responsibility. Additionally through an RESP, you can contribute up to $50,000 and the subscriber will have up until the 31st year of the plan to make contributions.

Through the Canada Education Savings Grant (CESG), the Canadian government also offers FREE money matching 20% (up to a maximum of $7,200). That’s an automatic 20% return on your investment! There’s also additional grant money available for lower-income families, such as the Canada Learning Grant (CLB) which gives eligible beneficiary up to $2,000.

It’s important to remember though that not all RESPs are created equal. RESPs are an investment vehicle and with it, your child’s university savings can really grow!

The dealing representatives at GRESP are here to help you save for your child’s post-secondary education, maximize all grants, build financial stability, and ensure your investment in a RESP is secure and growing. We are a multi-cultural company with trained experts who speak your language.

If you’re interested in finding out more about government grants or getting started with a RESP Plan, find a Global RESP Corporation dealing representative in your area. Or fill out a form and a Global RESP Corporation dealing representative will contact you.

Learn About the Many Ways You Can Spend Your RESP

As a parent, you only want what’s best for your children. You may have recently started a family and might think it’s too early to think about your child’s college education, but it isn’t. As residents of Canada, your family may be eligible for government grans when you open a Registered Education Savings Plan (RESP).

RESP lets you put away small amount of money on a regular basis. By the time your child enters college/university, they should have considerable savings to get them started on their path to continued academics. They can use that money to pay for tuition costs, room and board, books, and anything else they need.

Like many financial programs, there are a few RESP Canada rules to be aware of. These rules dictate how you can and cannot use your RESP savings. We’ll now explain these rules in-depth.

1. Transferring an RESP
There are a few situations in which you may transfer an RESP.

You may have intended the RESP funds to go to one child, but they may have decided to get a job after high school, join the military, or not attend college. Your second beneficiary however, wants to continue their education. You can transfer this money to the second child to receive the funds instead.

A beneficiary must be between 18 and 21 years old under the RESP program, per RESP Canada rules. An RESP is good for up to 36 years, so there’s no need to make hasty transfer decisions.

2. Withdrawing from an RESP
Once your beneficiary starts college, they will want to withdraw the money in the RESP account. That being said, according to RESP Canada rules, there are limits on how much money you can withdraw initially.

Some of the money in the RESP account is non-contribution money. This is a combination of government grants and your interest from the investments. For 13 weeks, the beneficiary is limited in how much non-contribution money they can receive. The cap is $5,000.
To withdraw non-contribution money, the beneficiary must have provide proof of enrollment. After that 13-week period is up, the beneficiary is not limited to how much money they can withdraw. You may also have contribution money in the RESP account which is your own money that was invested. The beneficiary can take out as much contribution money as they need right away.

3. Taxes on RESP
Beneficiaries have lifetime limits for their RESPs. If you add more money than the limit allows, you may be taxed for it. Provincial Education Savings Program and Canada Education Savings Program contributions are excluded.

If you have surpassed the limit, you or the beneficiary should withdraw the excess sum within a month. Barring that, you will be taxed each month at a rate of one percent. That’s why it’s so important to know all the RESP rules before starting the program.

To learn more about RESP rules, visit Global RESP Corporation. Try out our RESP calculator, a user-friendly tool that will show you how investing in an RESP, combined with government grants like the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) can yield additional returns on investment. You can enjoy peace of mind and know your child will be financially prepared to further their education.

The Benefits of Opening an RESP This Holiday Season

An RESP Makes the Perfect Holiday Gift

efundmeThe holidays are just around the corner, and for most people that means hitting the crowded malls. If you’re looking for a great gift idea for your new child, niece, nephew, or grandchild, skip the toys and gift them a Registered Education Savings Plan (RESP).

An RESP is a tax-deferred savings plan that helps you save for a child’s post-secondary education. It’s a meaningful gift that’s easy to start and easy to contribute to on birthdays, graduation, Christmas, or other significant holidays or milestones.

With an RESP you, or anyone else, can make regular contributions throughout the year; up to $2,500 annually, up to a lifetime maximum of $50,000. The money grows over time tax free, until the beneficiary starts to take it out.

When an RESP is opened, the parents can apply for two separate grant programs: The Canada Educations Savings Grant (CESG) and the Canada Learning Bond (CLB). Continue reading