REGISTERED
EDUCATION SAVINGS PLAN (RESP)
The ABC's of RESPs
If you're thinking about your child's education, now
is the time to open an RESP and
watch the savings grow.
A Registered Education Savings Plan is an investment vehicle that allows you to save for your child’s post-secondary education with an incentive of deferring taxes.
Government Grant of Up To $500 Per Year
On the first $2,500 contributed annually (either
by lump sum or regular monthly investments), a grant of 20%
is paid to a maximum of $500 per year. That could work out
to $50,000 in RESP contributions on behalf of the beneficiary,
plus the maximum lifetime grant of $7,200 for each student.
While the contributions are not tax-deductible,
taxes on all income and growth in the plan are deferred until
the child takes money from the plan for their post-secondary
education. Since most students have a low income, little
or no tax would be payable.
If the child chooses not to continue their
education, the funds can be used for another qualified beneficiary.
You can withdraw your contributions tax-free, and if certain
conditions are met, transfer up to $50,000 of the RESP income
into a RRSP if you or your joint subscriber spouse has contribution
room available. If you simply withdraw the accumulated funds,
the income earned in the RESP is subject to income tax at
the subscriber's marginal tax rate. Also, an additional 20%
tax is charged and the Government grant must be paid back.
Talk to your Member Service Officer or a Credential
® Investment Professional at your branch about opening an RESP today. They'll
educate you on everything you need to know.
RESP BENEFITS AND FEATURES
- A great way to save! An RESP is a
tax-deferred investment vehicle that allows a subscriber (usually
a parent or grandparent) to save for a child's post-secondary
education
- A generous grant! Federal Government pays 20% of the contributed amount each year to a maximum of $500 for each eligible child registered under this program, to a lifetime maximum of $7,200 per child
- Tax sheltered! Any money earned in the
RESP accumulates tax-free, until it is withdrawn. After
the child registers for a qualified program and withdraws
the money, he or she pays taxes on the income that was
earned in the RESP
- It's affordable! Minimum initial investment
is small and subsequent contributions with a PAD (pre-authorized
debit) can be made monthly. Plus there are no administration
fees!
- Start now! Begin early and your child's
investment will have more time to grow
- Invest wisely! Long term investments with
a high rate of return could yield your optimum savings
goal
- Lots of options! Your RESP investment can be in the
form of daily interest savings, term deposits, and mutual
funds** through Credential Securities Inc. and Credential
Asset Management Inc.
- Maximum contribution limit of $50,000 lifetime per child
- Contributions can be made for 22 years,
and the plan must be collapsed by the end of the 26th year
of the plan's existence
- NOTE: Contributions are not tax-deductible.
BUT the taxes on income and growth in the plan are deferred
until the child takes the money from the plan
RESP PLANS
Family Plan: Two or more children,
if one child decides not to go to college, the others can
benefit from the extra income earned within the plan. The
grant money allocated to the child who is not attending must
be returned.
Individual Plan: One beneficiary
** Mutual funds are offered
through Credential Asset Management Inc. and mutual funds
and other securities are offered through Credential Securities
Inc. Commissions, trailing commissions, management fees
and expenses all may be associated with mutual fund investments.
Please read the prospectus before investing. Unless otherwise
stated, cash balances, mutual funds and other securities
are not covered by the Canada Deposit Insurance Corporation
or by any other government deposit insurer that issues
deposits in credit unions. Mutual funds and other securities
are not guaranteed, their values change frequently and
past performance may not be repeated. Credential Securities
Inc. is a Member – CIPF. ® Credential is
a registered mark owned by Credential Financial Inc.
and is used under licence.
