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An RESP is a tax haven, planned to benefit post-secondary students. With an RESP, contributions (containing the investment’s principal) are, or have already been, taxed at the contributor’s tax rate, while the investment growth (and CESG) is taxed on withdrawal at the recipient’s tax rate. An RESP receiver is typically a post-secondary student; these individuals normally pay little or no federal income tax, owing to tuition and education tax credits. Thus, with the tax-free principal contribution available for withdrawal, CESG, and nearly-tax-free interest, the student will have a decent source of income to fund his or her post-secondary education.
An Individual (non-family) RESP account type is preferably suited for those who wish to start an RESP account. An individual plan is intended to pay for the education of one beneficiary. The rules that govern this type of account include the following:
An individual plan is wished-for to pay for the education of one beneficiary.
Anyone can activate an individual account and anyone can pay to it. You can even open a proposal for yourself. You usually don’t need to make the least deposit.
If the beneficiary discontinues his or her education after high school, You may be able to nominate another beneficiary. You choose when and how much money to deposit, up to the lifetime contribution limit of $50,000 for a beneficiary.
If you have an RESP with a financial organization, you can opt-in how to spend your money. If you have an RESP with a scholarship plan dealer, your money will be invested for you.
Registered Education Savings Plans (RESPs) support the parents, friends and family members to save towards a child’s future post-secondary education. You can use this plan if you, “The Subscriber are the beneficiary’s parent or grandparent. A family plan grants you to add one or more beneficiaries if your family grows in future.
If you already have more than one child or planning to have more children, a family plan is an attractive option, You can nominate one or more children as beneficiaries, and can add or make changes to beneficiaries at any time. If one of your children make a decision not to attend post-secondary education, your other children can make use of the funds and take advantage. With a family plan, all beneficiaries must be associated with you. They can include children, adopted children, grandchildren, and brothers and sisters. You cannot include an unrelated person in a family plan.
Beneficiaries must be below 21 years old when they are entitled to the plan (unless they’re being carried over from a pre-existing family plan) You usually don’t have to make a minimum deposit when you apply the plan.
Group plans work entirely different from individual and family plans, and each plan has its own rules, terms, and conditions. They also tend to have higher fees and much more restrictive rules.