Saving for your child’s future is simple with a Registered Education Savings Plan! What are the possible benefits you can get from the plan other than funding for education? Read on to find out!
Whether you plan on opening a family RESP for all your children together or you open individual RESP accounts, the benefits of this are many! A tax deferred education saving fund can definitely help the beneficiary achieve their goals be it educational or business! A RESP even serves as a great way to gain tax benefits on the savings!
What are the benefits of a RESP?
- Tax benefits
- Long term savings
- The sum is large
- Government grants can be utilized
- Can use for 36 years
A RESP can guarantee tax benefits for you as it is a tax deferred plan! The taxes are liable to be paid only by the student. They may end up paying very little taxes. The withdrawal for usage is not taxed until afterwards.
These accounts provide long term savings for the family opening the account. Even if the amount is not used for post-secondary education, it can be used for financial emergencies or for other financial needs by the beneficiary.
The Canadian government provides grants which greatly help in increasing the amount in the RESP. Since there can be multiple benefactors for the same account, the sum which is saved on a yearly basis can add up to a lot and thereby result in a large sum from government grants as well!
RESP allows the benefactor to combine government grants such as Canada Education Savings Grant with it and thereby greatly increases the amount of savings you can collect over the period.
The RESP can be kept open for a period of 36 years or till the beneficiary is above the age limit. This can really help you to develop tax deferred savings in your account. You can benefit to the maximum if you start the account as early as possible!