Allan Bush
September 03, 2019
A Back-to-School Registered Education Savings Plan (RESPs)
Question & Answer
With the first day of school upon us, we’re reminded of the need to save for our child’s post-secondary education and often think about whether or not we have enough in our Registered Education Savings Plan (RESPs).
To help, we’ve answered a few of the most common questions we hear at the Allan Bush Investment Team of CIBC Wood Gundy Investment Team:
Q: What are the benefits of investing in an RESP?
- Tax-sheltered growth – Earnings within an RESP are not taxed and when the money is withdrawn for education, it is taxed in the student’s name, resulting in little to no income tax.
- Government Contributions – The government will match 20% on the first $2500 contributed annually to an RESP with a maximum of $500. To qualify, an eligible RESP candidate must be under the age of 18, a resident of Canada and have a valid Social Insurance Number (SIN).
- Recovery – If your child doesn’t pursue a post-secondary education, they may be able to pick a new beneficiary or, if they decide to travel first, they have 35 years to use the funds.
Q: Can I automate my savings?
A: Yes! The Allan Bush Investment Team is also able to set up a pre-authorized contribution plan , where you can contribute weekly, bi-weekly or monthly.
Q: How much can I contribute to an RESP?
A: You are able to contribute any amount to an RESP, subject to a lifetime limit of $50,000 per beneficiary. You can contribute for up to 31 years, and have the flexibility to keep it open for a maximum of 35 years.
Q: It’s going to cost more than $50,000 for my child to get a post-secondary education.
What are my savings options beyond the RESP?
A: There are other investment options available to continue to invest for your child’s post-secondary education in a way that’s tax sheltered. Using a Tax-Free Savings Account (TFSA) is one way to achieve this and it would be looked at as part of your overall investment strategy and financial plan. Allan Bush and his CIBC Investment Team in Waterloo, can plan for your children’s postsecondary education as part of your overall investment strategy. For more information, feel free to contact any member of the team at any time.