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RESP - Registered Education Savings Plan
Higher education is quickly becoming a high-priced necessity for a child's future success.
Parents and grandparents want what's best for their children's futures. However, this takes long-term planning and preparation. Just as you would save for your retirement, contributing to a child's RESP is an excellent way to save for post-secondary education. It also allows you to access Canada Education Savings Grants.
What is an RESP?
An RESP is an education investment plan that allows you as the subscriber, to accumulate money in an investment portfolio for your child's, or beneficiary's post-secondary education. The withdrawals can be used towards your child's tuition, textbooks and living expenses at a qualified post-secondary institution.
What are the benefits of an RESP?
An RESP allows the subscriber's contributions to grow and earn income by compounding in a tax-sheltered environment until withdrawn.
Since the withdrawals of earnings are made in the name of your beneficiary, and spread out over a number of years, your beneficiary pays little, if any, income tax at their marginal tax rate (which is usually lower).
The Canada Education Savings Grant (CESG) provides additional education funding.
What is the CESG?
This grant is based on the annual contributions that the subscriber pays into the plan. The government contributes 20% annually on the first $2500 that you deposit into an RESP for your beneficiary to the end of the year that child turns 17.
The annual CESG maximum is $500 per beneficiary, with a lifetime maximum of $7,200 per beneficiary. Grant room can be carried over between years if you are unable to contribute the maximum in any given year.
Socially Responsible Investing (SRI)
As a member of Canada's Social Investment Organization, MSCU takes a highly principled approach to investing...read more
For more information on RESP's please talk to one of our investment professionals.
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