Yes, investing in an RESP for your child’s education is a great idea.
Here at Corner Brook Life Insurance, we are always surprised when we learn that most parents are not using an RESP to help save for their children’s education. Strategically investing in an RESP can help optimize those education dollars when the time comes.
While RESP plans have been around for years, these educational savings plans grew in popularity in 1998 when the government announced it would match 20% of the contributions made. However, there are still many parents who do not use an RESP in the most strategic or optimal manner.
RESPs provide the ability for all earnings within the plan to accumulate tax-free until withdrawn. Then when the funds are drawn out, they are included in the student’s income rather than the parents. This is done on the presumption that the child will be in a lower (or zero) tax bracket, meaning that very little tax (if any) will ever be paid on the earnings from these educational savings plans.
Another benefit of RESPs is that through the Canada Education Savings Grant (CESG), qualifying plans will receive a 20% contribution to a maximum of $500 per year, with the maximum entitlement per student being capped at $7,200 per child.
Here at Corner Brook Life Insurance, we can show you how to not miss the earnings potential in the early years when your child is first born. We recommend contributing to an RESP as soon as possible so that parents can take advantage of the financial rewards when the child starts their higher learning.
Let Corner brook Life Insurance show you how to maximize your tax-deferred (and probably tax-free) contribution to your child’s education. Contact us for an appointment.