RESP Information for Parents
There are many misconceptions when it comes to RESPs (Registered Education Savings Plans). Parents who simply want to save for their children’s futures can become overwhelmed with information or worse, not realize the importance of choosing the right plan for the children and end up losing their hard-earned money.
Important points to consider:
- 1. $12,800: There is up to $12,800 of federal and provincial grants available for deposits made into a child’s RESP. These grants are incentives meant to encourage families to start saving early for the education of their children and grandchildren.
- The Quebec Education Savings Incentive program: This program went into effect February 2007 and is available to residents of Quebec. Not all financial institutions are offering this benefit and the grant will be lost if you put funds in an institution that does not give this benefit – even if you transfer to another institution eventually. A list of promoters offering the QESI can be found at this link:http://www.revenu.gouv.qc.ca/en/citoyen/credits/credits/iqee/fournisseurs_reee.aspx
- Canada Learning Bond (CLB): Since 2005 Families who receive the National Child Benefit Supplement as part of the Canada Child Tax Benefit, are entitled to receive this benefit (normally families with NET income of less than $39,065). Families can open an RESP account for $0 and receive this benefit. No contributions are required. $500 is given the 1st year; then $100 per year for up to 15 years.
- Families with NET family income of less than $78,130 qualify for extra benefits. Amounts can be as high as 60% on deposits up to $500 contributed each year.
- Fees: There are always fees. Be wary of financial institutions who tell you there are none. Mutual funds have built in MERs that are often not disclosed to investors and can have a significant impact on your savings.
