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What You Need to Know about Registered Education Savings Plans (RESPs) in Canada

Registered Education Savings Plan or RESP is a type of savings plan intended for families that hope to save for the education of their children after high school. Though RESPs in general are known to benefit children, anyone in this country can actually open one with an adult as beneficiary. If you are the one who opened the plan, you will then be referred to as the “subscriber.”

As soon as your kids enroll in post-secondary education, they automatically become entitled to payments courtesy of their RESP; to be more specific, they will take EAPs or educational assistance payments. EAPs are literally made up of grant money from the government and investment earnings. Once your child begins receiving EAPS, he or she then is called the beneficiary.

So, if you are living in Canada and is interested in RESP, here are the most basic yet important things you need to know about it; remember, the key is picking the right plan for maximum success.
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1 – The first thing you should learn about RESP, specifically your savings is that they’ll grow tax free. In other words, so long as your investment earnings stay in the plan, it means it never will be subjected to tax.
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2 – You likewise should know that if you begin saving up for your child under 17 years old, it means the government will be putting in money into the RESP in the form of a bond or grant.

3 – You must likewise take advantage of the fact that you have the ability to put money in every single time you want and the lifetime maximum is $50,000, at least for the most part. But in every rule, there always is an exception, and in this case, you might come across plans that require or strictly impose monthly or annual contributions.

4 – It also is interesting to know that contributions aren’t also considered as tax deductible. You however can withdraw them from the plan whenever you want and it will be tax free.

5 – There is no denying that you’re quite new to this type of educational plan, but the good news is that there really are more than a handful of investment options made available for those hoping to get RESPs, including bonds, mutual funds, GICs, and stocks.

At the end of the day, you just have to learn that many of the available plans out there are flexible enough to allow you to make that all important decision of investing your savings.