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What are Registered Education Savings Plans (RESPs) and How do They Work? In Canada, there’s a popular dedicated savings plan called RESP or Registered Education Savings Plan intended to help parents save for their kids’ education right after high school. Though RESPs in general are known to benefit children, anyone in this country can actually open one with an adult as beneficiary. If you are the one who opened the plan, you will then be referred to as the “subscriber.” As soon as your kids enroll in post-secondary education, they automatically become entitled to payments courtesy of their RESP; to be more specific, they will take EAPs or educational assistance payments. By definition, EAPs are comprised of investment earnings as well as grant money from the government. The individual who is set to receive an EAP, like your child, will be called or referred to as the beneficiary. Therefore, if you happen to be residing in Canada and you are hoping to learn more about RESP before you avail of it, then you’ve come to the right place since we have all the basic information you need to know.
A Beginners Guide To Plans
1 – One of the first things you must know about your savings in RESP is that they’ll grow tax free. In other words, so long as your investment earnings stay in the plan, it means it never will be subjected to tax.
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2 – Next, know that if you save for your kid who’s 17 years old or younger, it means that the government is obliged to put money into the RESP, which in turn is classified later on as a grant or bond. 3 – Moreover, you must become aware that since it is your account or plan, you have the freedom to add money to it whenever you want; but mind you, the usual lifetime warranty amount is $50,000. But you should be aware as well that some plans will require you to set and schedule monthly or annual contributions. 4 – Also, know that contributions aren’t tax deductible, too. You however can withdraw them from the plan whenever you want and it will be tax free. 5 – It may be true that you are relatively new and unfamiliar with this type of program, but understand that it’s never really a difficult decision to make because you have so many different investment options available, including bonds and stocks, mutual funds, and GICs. At the end of the day, you just have to learn that many of the available plans out there are flexible enough to allow you to make that all important decision of investing your savings.