Importance of RESP

By Candian LIC, October 22, 2020, 4 Minutes

A Registered Educations Savings Plan is a government enabled system that allows you and other family members to make contributions to your child’s education in a systematic manner. This also allows you to gain access to a number of grants that can boost your savings.

Why is it important?

 RESPs are considered a great choice for saving for the following reasons:

1.Government incentives

 An RESP can help you make use of the CESG and Canadian Learning Bonds based on your income. These accumulate to a large sum over the years and can be super helpful in funding your children’s education comfortably.

2. Tax-Free Savings

 Over the years, your contributions made to the RESP can be withdrawn tax-free. The grants received from the government are taxable once withdrawn but at very low rates, giving you more profit than loss!

3. It can be easily transferred

 The greatest feature of an RESP is its flexibility. Not all plans are created this way, but when you choose one which is flexible, even if your child does not make use of the amount, it never goes to waste. It can be transferred easily to your other offspring or can even be converted to an RRSP to help finance your retirement comfortably.

Final Word

 The dependence on a good education to get placed in the right organizations has increased significantly. Most parents, without a plan like RESP would not be able to work towards saving the right amount, considering the increased costs and fees involved.

The RESP provides parents with an investment plan that only grows exponentially. The government aids that come with it, work towards providing better opportunities to children even from very low-income families. The many plans can be tailored to work for the betterment of your child’s future and provide them with a comfortable cushion.

Get started now! Open your RESP account and secure your child’s future with Canadian LIC.

How does RESP work?

How this plan works

Please note that when you close your RESP, the money that you have put into the RESP is returned to you. However, you will have to pay tax on the earnings in the RESP. Although there will be earnings on the CESG, the grant must be returned to the Government of Canada.

Types of RESP

There are three types of RESPs:

Feel free to contact us for more information on RESP plans. We can also help you find out about any conditions that may apply to the plan if your child does not continue their education after high school.

Guide To Choosing The Best RESP Provider For You

Deciding whose hands you choose to put your children’s future education is a daunting process. Here’s our guide to choosing an RESP provider!

While searching for a good RESP plan, most of us don’t give much thought to the RESP provider. However, this is the person who will be going to be advising us, taking care of our RESP, and will be in charge of providing us with the monetary value once we want to take it out.

Why is paying attention to your RESP provider so important?

 The RESP or Registered Education Savings plan provider is in-charge of your plan. Some providers tend to have extra costs or hidden fees in their plans. It is important to know

if there is any fee when you reach a limit on the amount or whether there is a service fee they may be taking. Sometimes, certain providers may even charge penalties when you want to close your account pre-maturely.

Another thing to keep in mind is that some portion of RESP money can be invested in the market too. Some people prefer to invest in other avenues to increase their value. This can be stock or mutual funds. As a provider, they will be doing so from their end. These methods usually have risks involved and need to be monitored on regular basis.

How can you choose the best RESP provider for you?

 Well, the first step in ensuring if the provider is good for you is to get to know them.

Meeting your RESP provider can help you understand their ideology and make the right decision. Asking them questions like “What is the extra fees involved? Do I have to pay anything once I have opened the RESP? Will I get regular reports on investments? and other such crucial questions, you can get a grasp of the way they function.

Checking their credibility using references and testimonials from previous clients can also help you make a better decision. It is also recommended to check whether they are allowed to provide you an RESP or not. Another way to verify the credibility of your RESP provider is to test their knowledge of the industry. This can help you determine how far your provider is going to be able to help you benefit.

Stop your search for the best RESP provider! Get in touch with Canadian LIC.

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Call 1 844-542-4678 to speak to our advisors.

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