An RESP is an educational plan that helps parents save for their children’s education and is registered in Canada. An heritage education funds plan gives you more chances to get other saving incentives like the Canada Learning Bond and other grants at HeritageEducationFunds.org. For eligibility, one must possess a Social Insurance Number (SIN) and a SIN for anyone enlisted as a beneficiary of RESP.
Benefits of RESP Tax
An RESP lets you protect your earnings from taxation while the education fund for your child multiplies. The funds will be taxed under the child’s name when they are ready to join college or university. Most students are low income earners; hence pay little or no tax at all. If you increase your RESP education savings plan contributions, your savings will have more time to earn interest.
What is the duration of an RESP?
Contributions can be made into an RESP until 31 years after opening. After that period, you can have all the savings into a single plan. After the closure of your RESP account, any amount from the government will be reimbursed to the Canadian Government. Those that are from personal savings will go to the person who subscribed for the plan.
The interest on individual and any government grants or bonds will be returned if all these conditions are met: all children in the program are 21 years old and not eligible for a bursary or grant; is a Canadian resident, and the plan is more than 10 years old. If the beneficiary opts to discontinue their education after high school, you need not worry because the accounts can stay active or open for up to 36 years.
RESP contribution limits have no annual contribution limit and the lifetime contribution limit is $50,000 and this includes all contributions made before 1998. It is important to increase your RESP contributions early as this will allow you to reach your goals in a shorter time.
RESP application procedure information can be found from financial entities like banks, credit unions, or financial planners. These dealers, institutions, and planners are referred to as RESP providers, and they will take you through every step of your application.
You can apply for an RESP for your child as soon as you can. This assures you of a secure education fund for your child as your contributions grow and earn interest. A grant will also take off the burden of the ever rising cost of education.