Registered Education Saving Plan
Your children deserve only the best education. An educational insurance helps you to provide this opportunity so you can give your children quality education they deserve. It is a fact that only the best universities provide the best training. The sad reality is the exorbitant cost of a university education is beyond the reach of your financial status. Good future requires proper planning and one is to create funds for the future cost of education. Utilize Registered Education Saving Plan or RESP as the solution. See resp providers as best options.
Tax deferred growth
A contribution up to maximum lifetime insurance of $50,000 per child is subject to deferred tax as long. When the child withdraws the money, the earnings are taxable but at lower rate.
Federal government has now three main grant programs available for minimal savings. You can inquire from resp providers.
Basic Canada Education Savings Grant (Basic CESG)
CESG tops RESP contributions by 20% addition to the first annual contribution of $2,500 and overtime gaining as much as $7,200 in extra investment capital over time. Unused grants cane forwarded to the time the child turns 17, so missed contributions along the years are made up. You can get the right figure using a resp calculator.
Added Canada Education Savings Grant (Add CESG)
An added Canada Education Savings Grant is a matching grant of either 10% or 20%. This is available on contributions made to an Registered Education Saving Plan after January 1, 2005. An additional grant of either 10 or 20% is provided on the first $500 contribution. Depending on your family income, potential offering can reach $7,200 CESG limit sooner than children are eligible to receive Basic CESG.
The Canada Learning Bond (CLB)
For children born in 2004 or later and whose parents or primary caregivers are recipient of National Child Benefit Supplement are qualified for CLB. To qualify for the benefit, a $500 RESP payment is required and an annual $100 continues until the child turns 15 years of age. Additional $2,000 in educational savings is provided by CLB.
In addition, certain provincial governments
They offer their own programs. For information on applicable program in your area, consult Right Advise consultant Group.
- It is flexible as the beneficiary can choose not to pursue a post-secondary education, select a different beneficiary or transfer the earnings on a tax-deferred basis as Registered Retirement Savings Plan (RRSP); but subject to certain restrictions. The exact amount will be shown in the resp calculator.
- Anyone is qualified to establish and contribute to an RESP – parents, grandparents, aunts, uncles and even good friends; however, the total contributions cannot exceed the RESP limits for each beneficiary. Use resp calculator for this.
- Funds segregated are often good investment choices as Registered Education Saving Plan providers will tell you. Your education investments must be in accordance with your overall financial goals and time horizon. It must follow effectively a strategy for asset allocation that qualifies for diversification and risk/return requirements.
- Opt for investments allowing switches to financial goals changes, especially in the two to three years prior to paying for books and tuition. Time is essential: the sooner you start, the more opportunity your children will have. The amount as shown in the resp calculator will enable your children to pursue the college or university of their choice, follow the career they want, and obtain the earning power they need.
Get the right advice consultant for guidance to the best resp providers to suit your needs.