A Registered Education Savings Plan (RESP) gives anyone the opportunity to help a child attend post-secondary education. Here are the top 5 ways of how the RESP program best benefits a child.
- Contributions from the Government
To assist in savings for a child’s education, the Government of Canada can contribute up to $9,200 towards your child’s RESP. This can go a long way to help finance some of the expenses associated with post-secondary programs.
- It all adds up!
Saving a small amount for 18 years can add up, a $100/month contribution can give your child over $21,000 without taking into account any earnings growth.
- Investment Growth Opportunities
Plan holders have the option of selecting an investment inside of the RESP account. In most cases, your child will have access to more money than you contributed into the account by the time they go to school.
- Help your child start off on a high note
Many students graduate with student debt, you can help lower or eliminate through the RESP program.
If a plan holder chooses to hold an investment in the RESP account, all the earnings growth is deferred until the funds are withdrawn. Furthermore, the withdrawals are done under the child’s name, which can potentially lead to a tax-free withdrawal.