It’s important to plan for a child’s post-secondary education by starting to save as early as possible. In this regard, the Registered Education Savings Plan (RESP) is a highly advantageous tax-sheltered investment. But the added value of this investment also lies in its many advantages. We’ll tell you more below.
One of the advantages of a Registered Education Savings Plan is the generous government assistance1 that maximizes your invested capital. By making an annual contribution of $2,500 (or $209 per month), income permitting, your child could receive up to $12,800 in grants2 , paid directly into their RESP!
One of the advantages of an RESP is that it allows your savings, as well as provincial and federal grants, to grow tax-free. A significant tax advantage for your invested capital!
As soon as your child under age 18 is enrolled in an eligible post-secondary education program3 , you can start making withdrawals so that your child can receive educational assistance payments (EAPs)4. These are made up of accumulated investment income and government grants. They are taxable and must be added to your child’s tax return. Your contributions will be returned to you and are not taxable.5 Keep in mind that these contributions will continue to grow tax-free as long as they remain in the RESP. It may be advantageous to keep them in reserve as a supplementary fund for education or to reinvest them for younger members of the family, depending on the withdrawal strategy you choose.
Opening an RESP with Kaleido means choosing flexibility in contribution amounts, frequency – and so much more. The range of IDEO+ RESPS allows you to define the savings strategy that’s right for you. In particular, you can opt for annual contributions or automatic monthly payments. This will ensure that you never forget to make a payment, and that you can maintain your savings pace. Payments can be stopped or modified at any time, at no cost.6
The flexibility of an RESP also lies in the choices your child can make in their educational path. RESP funds can be used to cover the cost of post-secondary education at all levels: vocational (VSD), college (ACS and DCS) and university.3
If you’d like to learn more about the Registered Education Savings Plan, download our free e-book; it’s full of useful information:
Would you like to benefit from a highly profitable tax-sheltered savings vehicle? Are you planning to finance the post-secondary education of a child or grandchild? The Kaleido team is at your service to assist you in opening an RESP and in all your efforts concerning your family and the future of your children.
1. Subject to obtaining the necessary authorizations to proceed with grant applications. Certain conditions apply. Consult our prospectus at kaleido.ca.
2. Basic Canada Education Savings Grant (CESG) from 20% to 40% and basic Quebec Education Savings Incentive (QESI) from 10% to 20%. Based on adjusted family net income. The maximum annual CESG payment is $600 and the maximum annual QESI payment is $300. The cumulative lifetime maximum per beneficiary is $7,200 under the CESG and $3,600 under the QESI. Canada Learning Bond (CLB) of up to $2,000 per beneficiary for a financially eligible child born after December 31, 2003. Certain conditions apply. Consult our prospectus at kaleido.ca.
3. Certain conditions apply. See eligible post-secondary programs in our prospectus at kaleido.ca.
4. Certain conditions apply. Maximum withdrawal allowed under the Income Tax Act.
5. Savings invested in Treasury bills, government bonds and quality companies. Contribution refunds are subject to investment risks. Certain conditions apply. Consult our prospectus at kaleido.ca.
6. See contribution options in our prospectus at kaleido.ca.