The power of a Registered Education Savings Plan

The Ritcey Report

Written by Lynn Healy-Goulet
September 13, 2016

If you have a growing family, chances are that – since heading back to school is right around the corner – you’re taking steps to ensure that your children are equipped to do so with complete confidence. That’s as it should be.

But did you know that you could save for your children’s future education with the Registered Education Savings Plan (RESP)? Here’s how.

The Registered Education Savings Plan (RESP)
A Registered Education Savings Plan is a government-registered savings plan that helps you save for a child’s post-secondary education. And the federal government can add to your savings with education grants.

Plus, your savings grow tax-deferred until withdrawn. When the student withdraws the investment income and grants for educational purposes, the withdrawals are taxed in the student’s hands, typically at a lower rate.

How it works
With an Education Savings Plan, you’re eligible to receive the Canadian Education Savings Grant (CESG). This grant matches 20% of annual contributions to a maximum of $500 per year and $7,200 lifetime limit per child.

This means that, if you save $100 a month you could receive up to $4,320 in CESG benefits per child when you contribute your full CCB payments from age 0-17. This amounts to $21,600 to an RESP.

Several plans to choose from delivering tax-deferred growth
Through Scotia Wealth Management, we offer both Individual and Family Plan RESPs and can help you choose the plan that works best for your family. You can contribute up to $50,000 per child and there are no taxes payable on the money earned in an RESP until it’s withdrawn. When your child withdraws RESP grants and earnings for educational purposes, they are taxed at the student’s generally low tax rate.

The sooner you start, the more you can save
All your child needs to become the beneficiary of an RESP is a Social Insurance Number (SIN).

Discover how much more can be saved for your child’s education by starting a plan immediately. Contact Kate Whynot at the Ritcey Team for help and advice about setting up an RESP plan today.