RESP - A UNIQUE Iinvestment for your child’s future

resP - a uniQue invesTmenT for your child’s fuTure

Sandeep Ahuja

Our children are our future and we endeavour to provide them best education so that they may become well-settled in their lives. But as the cost of postsecondary education is quite high in Canada, we need to start investing for their education when they are young so that we may be free from any financial worries when our children are ready for their university. InItIatIve of CanadIan Government

To ease the financial burden of parents, the government of Canada has designed a unique educational savings program namely Registered Education Savings Plan (RESP) which helps you to accumulate funds for your child’s postsecondary education. The subscriber has to contribute monthly through preauthorized payments until December 31 of the year in which the designated beneficiary at issue reaches age 17. At the end of the commitment period, your total payout is paid as Educational Assistance Payments (EAP). Who Can open reSp/be the named benefICIary?

You can enrol in the Diploma RESP if you have a Canadian address with a valid SIN number. It also includes people on work permits and refugees approved by IRCC. Your spouse can be the joint subscriber in the plan. When you enrol, you need to designate a beneficiary who should be a child of age 14, or under, who will receive the educational assistance payments when pursuing post-secondary studies. He/ she needs to be a Canadian resident with a SIN number. Your child can be made beneficiary of more than one RESP. It is important to note that after December 31 of the 31st calendar year following the plan’s creation, no contributions can be made. Also, the plan must cease to exist no later than December 31 of the 35th year following the plan’s creation. aSSIStanCe for loW InCome famIlIeS

In 2005, the government enhanced the program by providing an additional grant based on the parents’ family income. For low income families, the government offers another grant namely Canada Learning Bond (CLB) with the help of which, eligible parents get $500 in the first year and, $100 in each subsequent year of eligibility until the child reaches 15 years of age. The cumulative limit of CLB offered to a child can therefore reach $2,000.

To be eligible, the beneficiary must be a resident of Canada born after December 31, 2003 with a valid social insurance number (SIN). Besides, provincial governments also pay grants to eligible families under the RESP program. hoW muCh money Can you Save?

The maximum lifetime contribution limit per child is $50,000 while there isn’t any annual contribution limit. This implies that as per your budget, you can invest up to $50,000 in the plan.

To encourage parents to invest funds in postsecondary education of their children as early as possible, the government of Canada has devised CESG plan. CeSG In a GlImpSe: Annual Grant: 20% of your annual contribution

Contribution Limit of

Annual Grant: $500

Total Lifetime Limit per Saving (per Beneficiary):

$7,200