Benefits of Getting RESP for Your Children
To have a post secondary education is North America is something very expensive, and unless you are a wealthy family, you will have second thoughts about letting your children have them. Not all kids go to college, but if they want to go you should have been prepared beforehand, otherwise it will be a great financial burden to you. Sending you kids to college will only be possible if you are looking at finally having some financial security.
If your children want to go to college then it can be possible through RESP or Registers Education Savings Plan. The RESP is a savings plan that can grow tax free and is something that is sponsored by the government. Money paid from the plan at maturity may be taxed as income for the student.
Private companies or individuals are the plan administrators and they can invest the money that they collect from the plan. The yearly contribution for each student reaches up to about $4,000 and their lifetime limit is $42,000 without taxes. The lifetime limit is per student even if he has more than one plan.
20% of your contribution is added by the government until the student reaches his 17th birthday. The additional money given by the government is called the Canada Education Savings Grant or CESG, and this amount in not included in the annual limit for tax purposes.
A student can receive from CESG a maximum of over $7,200 over the lifetime of the plan. Any unclaimed contribution of the CESG each year will accumulate and $800 can be paid which was not previously claimed. All money added by the CESG to the RESP should be returned to the government in the event that the money is not used for educational purposes.
If you are a resident of Canada and have a Social Insurance Number or SIN, you can apply for the RESP. The SIN of both the student and the one providing the contributions must be provided to the promoter at the inception of the plan.
The three different RESP plans are given below.
In the non-family plan, anyone can make a contribution and there are no limits to the amount but only one student can benefit from it.
In the family plan, only family members can make contributions to the plan which can benefit one or more students. There are no restrictions as to when and how much is paid.
The group plans have requirements of the amount that is paid and when it should be paid and are usually offered by foundations. Each age group will have a particular plan and all members will take a share. The rules attached to the group plan is quite complicated and should be researched thoroughly with the plan providers before committing.
Source: http://financewand.com/how-should-i-finance-my-childs-education/