Summer is in full swing and you’re taking full advantage of everything it offers. But all good things come to an end and school starts again soon. What’s more, the children are getting older and soon you’ll be asking yourself how to finance their ongoing studies. Why not use the savings plan offered by the government, the RESP, to help out?

Whether you’re a parent, grandparent or other family member, the subject should interest you because the plan can provide worthwhile benefits.

What’s an RESP?

An RESP is a tax-sheltered savings plan designed to help families finance their children’s post-secondary education. There are two main types of plan: individual and family. The lifelong contribution permitted is $50,000.

The contributions are not tax-deductible, but can be withdrawn from the plan at any time on a tax-free basis. The plan grows tax-free and allows flexible investment options.

One of the principal advantages of the RESP is the Canadian subsidy for education savings (CESG – Canada Education Savings Grant). Every year, the government contributes an amount equivalent to 20 per cent of your contribution up to a maximum annual amount of $500 for each beneficiary.

If this latter has unused subsidy room from a previous year, the annual maximum payable will be $1000. The lifetime subsidy limit is $7,200 for each child.

Once they are registered in a postsecondary education program, the plan beneficiaries can make withdrawals and will be personally taxed on the amounts withdrawn.

I have provided a brief overview of the Registered Education Savings Plan (RESP) to give you an initial understanding of its potential benefits. Don’t hesitate to contact me if you would like to look at this savings opportunity in detail. I’d be pleased to work with you to identify the best way to optimize the plan to help finance your children’s education.

In the meantime, enjoy the waning days of summer with your family before school starts up again.