Registered Education Savings Plan ( RESP)
You and your spouse were blessed with an irreplaceable gift of life, a CHILD. After the initial anticipation and excitement of birth has settled, you begin to think about his/her future. As a parent, you have the opportunity to set up an Education Fund to assist financially with your child's post-secondary studies. You probably have heard about the RESP program and how it works, but as well you need to be aware of the two different types of RESP's that are offered in Canada.
How RESP works:
- Subscriber ( parent, guardian, relative) contributes to RESP ( No annual contribution limit (up to $2,500/year recommended), but subject to a maximum of $50,000 lifetime contribution limit per Student Beneficiary
- Government contributes grants/incentives ( depending on family income 20%-40% and/or $500)
- Promoter ( company that manages RESP) administers funds. As long as earned income stays in the plan it is accumulated tax-free.
- Subscriber can withdraw his/her contributions tax-free.
Types of withdrawals:
1. Beneficiary enrolls in Post-Secondary Education
2. Beneficiary DOES NOT enroll in Post-Secondary Education
Group Scholarship RESP
When you are offered a Group RESP you should ask a following questions:
What will happens when: