A family registered education savings plan is one of the most effective and smartest investments you can do to make your child’s future more secure and fruitful. A family registered education savings plan is a tax-deferred education savings investment account that comes with annual government grants. In addition to this, the beneficiary under a family register education savings plan is allowed to qualify for grants of about 20% or more of a contribution that is initially applicable, as the case may vary with different investments.
This education savings plan can be opened for any of your prospective family members, if you have your child, your niece, your grandson, or any other loved one. You can put your money in the form of deposits in a registered education savings plan as your child grows. When they arrive at the stage of pursuing post-secondary education and their careers, you don’t have to worry about whether they can afford their education costs or not.
What’s the best part about this?
While in the plan, there is no tax imposed on the earnings, and the government itself deposits in education savings grants and incentives along with the amount. A family RESP grows faster than any other fund that can help you in such a situation. Some of the main concerns that you are likely to face are –
Who are the critical members of an RESP?
A registered education savings plan includes a beneficiary, a promoter, and a subscriber. To elaborate –
The beneficiary- A beneficiary is a person or a child for whom the account has been opened under the plan. In short, is a child who will get access to the money when they need it for their post-secondary education.
The promoter – A promoter is a company that governs the registered education savings plan. It is the parent organization, which is the Canadian scholarship trust Foundation.
The subscriber – A subscriber is a person who opens the account on behalf of the beneficiary. It can be done by self or with the company of a joint subscriber, which is mostly the spouse or common-law partner.
What is the procedure involved behind the working of an RESP?
The whole working procedure of a family RESP is pretty simple. The subscriber enters into an RESP contract with a promoter with the name of one or more children as the prospective beneficiary. Also, a child can be added to the existing family plan later, but that entirely depends upon whether they are siblings or not. If they happen to be siblings, the procedure could be further followed. The subscriber is expected to make regular contributions to the plan over the years. Then the promoter is responsible for applying for government grants on behalf of the subscriber to get most out of contributions into the existing RESP. The promoter is also responsible for helping the subscriber in the investment of his/her money.
Eventually, when the child is ready for post-secondary education, he or she can withdraw money from the educational assistance payments and funds.
What is the ideal time to open a registered education savings plan?
The earlier you start saving for your child’s education, that it will be for you to have time for your money and its potential to grow. A lot of people open a RESP even for their babies. With that being said, it is never too late to start with this plan for your child and to start taking benefits of the government grants and this tax-free growth while the project is still in its process.
