In Canada is a great way to save for your child’s education is an RESP. RESP accounts enable your contributions to grow tax-free. Additionally, by opening an RESP account, your contributions become eligible for education grants from the Canadian government. An RESP Canada account offers flexibility, growth opportunity and free money for your child’s education. This is what you need to know about setting up an RESP in Canada:
Benefits of a RESP in Canada
The benefits of a RESP in Canada are huge. The money you contribute goes into a stable, secure account that offers modest growth in return for the stability of your investment. The Canadian government offers the Canada Education Savings Grant, which offers up to $500 per year in addition to the money you deposit, depending on your income and annual contributions.
The account represents no tax liability, and if your child does not attend an eligible post-secondary program, your contributions can be returned to you tax-free. There’s really no downside to opening an RESP, and it can be a great asset for your child’s education.
How Canada's RESP Program Works
RESPs in Canada are quite simple: you contribute money to the account; the government matches a portion of your contribution with the CESG; your money earns interest in the account; and the account makes Educational Assistance Payments to your child when he or she enters an eligible program. You can also designate your child to receive additional benefits from your contributions to help pay his or her college expenses.
Best RESP in Canada
Who offers the best RESP in Canada? That question isn’t as easy to answer as it sounds. RESP programs are offered by financial institutions, such as your bank or credit union, but they’re also offered by group plan providers. Each of these options have upsides and downsides, and what’s “best” is subjective based on your needs. The best RESP provider in Canada may be a large group program that offers good returns and benefits, or your local financial institution, which offers flexibility and transparency.
When you’re shopping for a RESP in Canada, make sure you understand what you’re getting. Read the fine print. The government has specific RESP rules that govern how RESPs can operate, but much of the day-to-day administration, fees and penalties and withdrawal options are left to the individual RESP plan administrator. Make sure you understand what you’re getting when you sign up for an RESP, and look for a clear fee schedule to understand what you’ll pay for your RESP.
RESP Calculator Canada
A RESP calculator Canada can help you determine how much to contribute to your child’s RESP monthly or annually. You can set different factors, such as the age of your child, the current savings and the year your child will begin post-secondary education. A RESP calculator can help you determine whether you need to change your annual contribution amount and decide how to best maximize your child’s education savings. Some RESP calculator options also include your net annual family income, which will determine how much you can receive in CESG contributions.
Try our RESP Calculator to find out how much you can save.