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InvestmentPitch Media's Tia Borden discusses Registered Education Savings Plans (RESP’s)

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Today we’d like to discuss Registered Education Savings Plans or RESP’s as they are commonly known. With costs of post-secondary education increasing every year, you should consider an RESP to help save for a child’s future education.

Additional Information:

Company: Government of Canada
Website: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/resp-reee/menu-eng.html
Date Published: Jan 14, 2016
Transcript: Available

Video Transcript:

I’m Tia Borden for InvestmentPitch Media

Today we’d like to discuss Registered Education Savings Plans or RESP’s as they are commonly known.

With costs of post-secondary education increasing every year, you should consider an RESP to help safe for a child’s future education.

They offer you flexibility, tax deferral and direct government assistance when saving for a child’s education.

You can set up an RESP for any “beneficiary”, including your own children, grandchildren, nieces, nephews or family friends.

You can also set one up for an adult, or even yourself, plus you have the flexibility to change the beneficiary at any time.

To qualify, each beneficiary must be a Canadian resident and have a social insurance number.

RRSP’s can be set up for a single beneficiary, or you can enroll more than one beneficiary into a single Family Plan if they are related by blood or adoption.

Furthermore, one child may be enrolled in multiple RESPs.

As the person opening the RESP, and making the contributions, you are known as the “subscriber”.

As the subscriber, you can contribute any amount to an RESP, subject to a lifetime contribution limited of $50,000 per beneficiary.

Although you cannot deduct your contributions for tax purposes, there are no taxes payable on the money earned within the RESP.

When the student withdraws the funds for either full-time or part-time studies at a post-secondary level in a qualifying educational program, the withdrawals are taxed in the student’s hands, typically at a lower rate.

You can structure an RESP as self-directed, much like you would with an RRSP or TSFA, which gives you full control over the investments.

Now for the best news…

The federal government helps you build the RESP savings each year through a Canada Education Savings Grant, which matches 20% of your annual contributions up to a maximum of $500 per year with a $7,200 lifetime limited per child.

We recommend you contact your financial advisor today for more details, as every year you wait, you’re missing the opportunity to collect $500.

I’m Tia Borden for InvestmentPitch Media