About
RESP
The Registered Education Savings Plan (RESP) serves as a crucial tool for families saving for their children's post-secondary education. It's designed to help parents, guardians, or other contributors save and invest money for their child's educational expenses.
One of the most significant advantages of an RESP is the ability to grow savings tax-free. Contributions made into the plan are not tax-deductible, but the earnings generated within the RESP are tax-deferred until withdrawn by the beneficiary for educational purposes.
The Canadian government provides an additional benefit through the Canada Education Savings Grant (CESG), wherein they match a percentage of contributions made into the RESP, boosting the savings and investment potential. Moreover, low-income families might also be eligible for the Canada Learning Bond (CLB), providing an initial contribution to kickstart the RESP savings.
RESPs offer various investment options, allowing contributors to invest in diverse assets like stocks, bonds, mutual funds, and GICs. The flexibility to invest these funds and let them grow tax-sheltered significantly benefits families aiming to secure their child's future educational expenses.
Another noteworthy aspect is the ability to transfer unused contribution room between siblings, providing a considerable advantage in maximizing savings for educational needs. RESP contributions can be made annually up to a lifetime limit, offering an effective way to save for a child's higher education while enjoying the tax-deferred growth of investments.
