PINKNEY FINANCIAL SERVICES

Registered Education Savings Plan

Investment & Savings

Registered Education Savings Plan (RESP)

A Registered Education Savings Plan (RESP) is a tax-advantaged investment account specifically designed to help parents save for their children’s post-secondary education. The Canadian government introduced the RESP program to encourage families to save for future educational expenses.

RESP

A RESP can facilitate you to save for a child's post-secondary education or training. A type of tax deferred savings plan that usually allows parents or grandparents to contribute. Any investment income within the plan is tax-deferred until withdrawals are made.

Key Features of a RESP

  • Government Grants: One of the major advantages of opening an RESP is the opportunity to receive government grants. The Canada Education Savings Grant (CESG) matches a portion of your contributions, providing an extra boost to your savings. Depending on your contribution level and income, you can receive up to 20% or 40% in additional funds through the CESG. The CESG is available until a child is 17.
  • Tax-Deferred Growth: All income earned within an RESP is tax-deferred until the funds are withdrawn. This means that your investments can grow faster since you don’t have to pay taxes on the earnings annually. When your child starts using the funds for their education, they will typically pay taxes on the withdrawals, but at a lower rate since they are likely to have a lower income.
  • Flexibility: RESPs offer flexibility in terms of investment options. You can choose from a variety of investment vehicles, including mutual funds, stocks, bonds, and Guaranteed Investment Certificates (GICs). This flexibility allows you to tailor your investment strategy to match your risk tolerance and investment goals.
  • Transferability: If you have multiple children, RESPs can be used for any eligible beneficiary. If one child decides not to pursue post-secondary education, you can transfer the funds to another eligible family member, such as a sibling.

RESP contributions cannot be deducted from your income. In addition, you cannot deduct the interest you paid on money you borrowed to contribute to an RESP.

The Canada Education Savings Grant (CESG) is a federal program offered by the Government of Canada.

Click here for information about RESP rules, contributions, grants, and withdrawals on their website

 

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For 26 years Pinkney Financial Services has been a very important part of my financial future. I’m most grateful for everything they have done for me over these many years.
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