Registered Education Savings Plan (RESP)

Everyone worries about how to pay for their child’s education after high school. The
cost of college and university tuition is steadily rising. When you add in the cost
of books, room and board and even parking, parents can easily be overwhelmed. In
Canada the RESP or Registered Education Savings Plan money can be saved and
sheltered from taxes, until the time the child is ready to attend post-high school
training. In some instances residents will have access to money from Canada`s
government in the form of education grants and learning bonds.

The first step is choosing a Registered Education Savings Plan. There are several to
choose from. Because each family is different, it is important to research carefully
and find just the right plan for you and your future student. If you aren’t sure
which one is best, you can meet with a representative from the bank or a financial
planner to get more details.

You can choose a RESP for your family as a whole. This means that the account is set
up for any one of your children to save for college. It is also possible to open one
account per child. When you participate in a group RESP everyone works together
combining their contributions in order to receive added benefits. Because of all of
the options you have it is important to make your decision with the help of a
professional.

RESP accounts vary from provider to provider. They differ in the amount needed to
open the account. They may differ on the requirement of monthly contributions. Some
have service fees while others do not. It is important to read all of the
information to ensure that you have chosen the correct plan. In some cases you can
even choose the types of investments you are planning to place your RESP money in.

One of the best parts of this program is the ability to open an account at any time.
The younger your child the longer you have to save. With some of the government
sponsored programs you can earn an extra percent of what you put in over the course
of the year. For those wondering whether or not to start early, this is a huge
incentive to get started right away.

As an added bonus, adults are also eligible to open up accounts for themselves.
While they are not able to participate in any of the government offered incentives,
they can still save funds towards their own education. For adults with plans to take
any type of class, this can save money in the long run. While younger students
typically don`t have enough income to have the disbursement taxed when they remove
money for school, adults could be taxed based on their income.

The overall limit for a RESP is $50,000 per account. It is possible for other
people, aside from family members, to make a contribution. This may be part of the
argument for opening an account for each child separately. The plan to save makes
sense on so many levels.

It can be tough to come up with large sums of money at one time in order to pay for
tuition and other necessities. When looking at student loans, parents may fear the
results of a loans calculator and how much their child will have to pay back. Having an account
specifically put aside for education can remove some of the burden that parents
feel.