What is the uptake of RESPs among different communities in Canada?

Opening an RESP account is pretty easy. First, select a provider—like the Canadian LIC, known for its reliable guidance when it comes to opening Education Savings Plans across Canada. Next, the beneficiary of your RESP could be your child, relative, or even your family friend. Finally, some identification for you and your beneficiary will be required. Keep in mind that you can get individual RESP Quotes directly online from our website, so it really does not matter where you are or what time it is. One of our clients, a busy mother of two, used our online platform to set up her plan during her lunch break!

Absolutely! RESPs are flexible and can include full- or part-time studies at colleges, universities, trade schools, or any other vocational programs. We once had a family where the eldest child used the funds to pursue studies in culinary arts at a vocational school with the help of an RESP, showing how versatile the plan is. The important thing is that it has to be an educational facility that falls under the guidelines of the Registered Education Savings Policy.

When you set up an RESP in Canada, you automatically get many government grants. A chief among them is the Canada Education Savings Grant (CESG), which matches up to 20% on the first $2,500 put in an RESP annually. There’s also the Canada Learning Bond (CLB) for eligible families, which is nothing short of a bonus since there’s no requirement for parents to make personal contributions. Most of the time, we find our clients pleasantly surprised by how much the grants can help with their savings!

Yes, there are some limits to which you need to be aware. The lifetime contribution limit for an RESP is $50,000 per beneficiary. There is no annual contribution limit; however, a strategic approach to contributions is important in maximizing government grants. A father from Montreal shared how he spaced out contributions to ensure he maximized the government match each year, planning effectively for his daughter’s education.

Suppose the beneficiary does not attend any post-secondary education. In that case, you then have a few options to consider: You can transfer money to another beneficiary or withdraw your contribution without penalty. Any growth in the account and government grants can be transferred to your RRSP or withdrawn with implications. We have dealt with a client whose son decided to pursue business instead of furthering his education in college. We helped them restructure their plan in such a way that they could best support their child in entrepreneurship.

An RESP requires one to sign up, open an account, and ultimately make contributions. Canadian LIC can walk a person through these steps so that the individual will truly understand all the fine details involved. Our agents are skilled at explaining complex information in simple terms to help you make the best decisions for your family’s educational future.

Yes, you can change your investment options over time, depending on your risk tolerance and how many years are left until your child starts their education. We will, on a regular basis, review plans with the client to ensure that the investments remain appropriate for their changing needs and goals. This could be illustrated by the recent example of the couple who were transferring into more conservative investment choices as their child was approaching the end of high school.

Comparing RESP options is of key importance. Consider those plans that have flexible contribution schedules, numerous choices of investment, and competitive fees. You can easily compare a number of plans using the “RESP Quotes Online” tool from the Canadian LIC website. This tool was especially helpful to a family who were new to Canada in understanding their options and choosing which one was best for them.

RESP is an extremely good instrument for providing safety to your child’s future education.

You can begin withdrawing from your RESP when your beneficiary starts a post-secondary qualified educational program. In this regard, Canadian LIC suggests planning to withdraw early in education to benefit from the longest possible investment time. A recent example is a client who initiated withdrawal prior to the first semester starting so that tuition fees and the price of books could still be covered on time.

With several children, it is more economical to administer one RESP with several beneficiaries all under one plan. This method ensures that the distribution of the funds across the children is more flexible. A family of three children spoke on the flexibility provided by a family plan. “Since the beginning, we knew at what time and how the money would be divided among children, given their age and time of entry to college. This flexibility helped us plan accordingly for them.”

Canadian LIC has an “RESP Quotes Online” that is user-friendly when comparing the various RESP plans. It makes the features and benefits of the various plans understandable at a single glance. For example, a young couple was able to select the most suitable plan for their newborn after comparing several options online, making their decision-making process smoother and more informed.

This will ensure that your annual contributions reach the threshold necessary to qualify for maximum government grants, which are $500 annually for every $2,500 in contributions. Canadian LIC can help you set up a contribution schedule that works with your finances and maximizes grant eligibility. We once had a client who lost a year’s grant because he needed to contribute more; we helped the client adjust his future contributions so as not to have this happen again.

While contributions to an RESP cannot be deducted from income, the growth on the investments, along with government grants, goes untaxed until the money is taken out. When those funds are withdrawn for education expenses, they are taxed in the hands of the student, usually resulting in little or no tax payable because they have little or no income. We helped a family plan their withdrawals to minimize their tax burden, effectively using the RESP to cover their son’s entire university tuition without additional taxes.

RESPs should be part of your bigger financial strategy, notably in regard to retirement savings and debt management. Canadian LIC will give you advice on how to strike this very balance: making sure that saving for the education of your child isn’t at the detriment of your overall financial well-being. For example, we helped a family ensure that their contributions to RESPs were aligned with a good retirement plan so that they would have both their children’s futures and retirement in good hands.

Congratulations if your child lands a scholarship! That doesn’t affect the RESP at all—those funds can be used for other educational expenses. Any leftovers are handled according to whatever flexibility the plan offers. We had a client whose daughter earned a full scholarship, and they used the RESP to fund her off-campus and overseas expenses.

Be it entering into a new plan or just getting a better understanding of the one you already have in place, Canadian LIC is here to guide you through every step. Don’t hesitate to reach out with any questions and begin your journey in education savings today!