In this issue:
- Government of Canada | Registered Education Savings Plans
- iA Financial | How does the RESP work?
- RESP withdrawal rules and strategies for 2017
- Manulife Financial | RESPs – No longer just for kids
- Manulife Financial | The rising cost of education: How will you pay for it?
- Manulife Financial | Secure your grandchildren’s post-secondary education needs
A registered education savings plan (RESP) is a contract between an individual (the subscriber) and a person or organization (the promoter). Under the contract, the subscriber names one or more beneficiaries (the future student(s)) and agrees to make contributions for them, and the promoter agrees to pay educational assistance payments (EAPs) to the beneficiaries.
Your contributions can help fund the education of your children, as well as that of your grandchildren, your nephews and nieces, or your godchildren, depending on the plan type you choose: individual or family. When you form good savings habits and contribute to your child’s RESP when they are young, you are giving them access to a larger amount when they start their post-secondary education.
When the RESP beneficiary (student) is ready to go to school, the subscriber (owner of RESP account) needs to start withdrawing money from the RESP account. To withdraw money you have to provide some proof to your resp provider that the resp beneficiary (child) is going to an approved post-secondary school. You don’t have to show receipts for specific purchases.
It’s a common misconception that RESPs are only useful for parents saving for their child’s post-secondary education. With a little financial savvy, an RESP can provide an effective means of funding an adult’s education and it can also provide an income splitting opportunity as well.
While paying for a child’s post-secondary education is a great investment in his or her future, Canadian tuition fees and other education-related expenses continue to climb. As a result, it’s becoming difficult for many families to fund the cost of post-secondary education, especially if there’s more than one child involved.
Saving for a child’s post-secondary education is an important investment in his or her future, particularly with the rising costs of tuition and related expenses. Studies suggest that in 15 years the average 4-year program, including tuition, accommodations, transportation and student fees could be $117,000.
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