When it comes to preparing for a child’s education, there is a whole lot that a person can do. In fact, with the number of choices people have surrounding supporting a child’s education, people might begin to feel at a loss as to what they should do. Thankfully, there are some choices that tend to be more suitable than others. For example, Registered Education Savings Plans from heritage RESP are plans specifically designed to prepare parents to properly set aside money for their child’s education. With a Registered Education Savings Plan, parents will be able to properly organize the money necessary for their children to be able to go to a reputable college. Here are four exact reasons for how this can help parents.
1. The Money Is Not Initially Taxed.
Most people aren’t too much of a fan of having their money taxed, especially when the money is meant to go towards their child’s future college education. With that being said, a Registered Education Savings Plan, otherwise known as RESP, is one way to not have to deal with this issue. Initially, the money that a parent decides to put into a RESP is not taxed. This means that even more money can be saved for the future college education of a child, which is something that most parents will greatly appreciate.
2. There Is a Lot of Time.
Generally, parents will open up Registered Education Savings Plans when the child is first born. After that opening, the RESP is open for the next 31 years, meaning that parents can make contributions throughout the child’s lifetime. Even after those 31 years, most places will generally wait until the end of the 35th year before the RESP expires, although this will vary depending on the terms of the plan. Even after the child finishes high school, there will be a little bit of time where the child can wait to decide which college he or she wants to go to before the RESP closes. This also offers the opportunity for over 30 year’s worth of money to be saved up in a tax-free manner for a child to be able to use to pay off college costs.
3. Family Plans Are Available.
The idea of having multiple RESPs for each child in a family can get overwhelming for some parents. With that in mind, some places will offer family plans to make it easier to manage multiple children. With family plans in order, parents can make the choice to make more than one contribution at a time for a child or two, and the amounts that are being contributed do not have to be the exact same per child. This also makes it easier to set plans for a child’s future, especially if one of the children proves themselves to be more academically inclined than the other.
4. Sometimes the Government Will Add Money.
Depending on what age a parent starts saving for their child, the RESP might be eligible for a grant or bond given by the federal government. Also depending on the province, there might be some additional contributions. This will help, as there will be even more money in the RESP that the child can use to handle college expenses, while still getting a good education in the process.