While facilitating workshops throughout the city I am surprised at the number of families, who do not take advantage of savings available for their children. The Government of Canada continually sends out communications telling parents of the amount of money that is available for their children’s education.
This is done to encourage families with children to open Registered Education Savings Plan for their children’s education.
Today we will discuss Registered Education Savings Plan.
REGISTERED EDUCATION SAVINGS PLAN
Registered Education Savings Plan (RESP)
The Registered Education Savings Plan (RESP) allows savings for education to grow tax free in a special savings plan registered by the Government of Canada until a child named in the RESP enrolls in a post-secondary education program.
Applicants must meet the following criteria:
- have a Social Insurance Number (SIN)
- have a SIN for anyone named in the RESP as a beneficiary
- Information on the RESP application procedure is also available through financial institutions, such as a bank or credit union. There are also other providers. These institutions, planners and dealers are known as “RESP providers.”
It’s a good idea to ask some questions before choosing a Registered Education Provider.
Here are a few questions you should ask when talking with a RESP provider.
- Once I have opened an RESP, will I have to pay any fees? If so, what are they for and how much will I have to pay?
- Do I have to put a minimum amount of money into an RESP?
- Do I have to make regular payments?
- What are my investment choices? What are the benefits of each choice? Can the value of my investment go down?
- Can I withdraw money if I need it? Are there any fees or penalties for withdrawing money early?
- Can I transfer the RESP to another person, or to another RESP provider? What is the cost to transfer?
- What will happen to my savings in the RESP if my child does not continue his or her education after high school?
- Does the RESP provider limit the types of qualified educational programs that I can use my RESP for?
- What happens if I close my RESP early?
- What if my child decides to go to school part-time?
- Does the RESP provider offer all education savings incentives including the additional Canada Education Savings Grant and Canada Learning Bond?
Next week we will discuss all the other Savings available for families including the Canadian Learning Bond and the Canada Education Savings Grant.