RESP is a financial savings plan that allows parents to invest in the education of their children. RESP helps the parents to invest funds for the kids’ schooling, which is usually costly without any plan. RESP also enables parents to make suitable ventures as per their needs. Below are some and benefits of opening an RESP with them.
Who are RESP providers?
RESP providers are the institutions that hold RESPs. They include financial institutions such as banks, credit unions, mutual funds and scholarship trust funds. Financial institutions and fund brokers provide self-directed RESPs while group RESPs are offered by scholarship trust funds.
What are the universal benefits of RESPs?
Below are some of the benefits that you can enjoy across all the providers;
Although RESP is deducted from the parent’s payable income, the principal and earnings from it are tax-free. The income made from the plan remains under the plan and it’s relieved from all forms of taxation. The tax exemption is an opportunity for the investment to increase.
When the child is at the tertiary level, it is at the discretion of the parent to decide on the sum of money to withdraw. The plan permits the parents to withdraw enough funds for the education of their children. The parent has up to 35 years to spend the funds if the child decides to quit schooling. They can also choose to replace them with another beneficiary.
It is good to save for higher education funds in a different account. This helps parents in attaining critical financial goals. RESP is different from the regular savings account. Parents can save funds exclusively for their children’s tertiary education. The plan helps parents avoid spending money meant for education on other needs.
Do you worry about how to save for your child’s education? Go to any of the above providers and open an RESP for your child.