Personal Financial Planning for families in Calgary: RESPs

RESP Calgary

Personal Financial Planning for families in Calgary: RESPs

In previous posts, we’ve outlined key facts about RRSPs and how contributing to them can help you save towards your retirement. Our team, headed by Calgary insurance specialist Denise Higginson, wants to bring you even more tools and information to help you make the best decisions when it comes to personal financial planning. With university and college tuition rising, making saving for your child’s education a long term personal financial planning goal is very important. RESPs can be a valuable tool to contribute to these savings.

What is an RESP?

An RESP is a savings plan that allows an individual to save for a beneficiary’s education. ESPs are usually set up by parents or guardians for their children, but they can be set up for a child by a grandparent or other relative as well.

RESPs at a glance:

  • To start and RESP, both the subscriber and the beneficiary need to have Social Insurance Numbers.
  • An RESP can hold a variety of investment products, including GICs, mutual funds, as well as individual stocks and bonds.
  • The total lifetime maximum for RESP contributions is $50,000 per child, but there is no annual contribution limit.
  • An RESP has a maximum life of 35 years
  • RESP contributions can only be made until the beneficiary reaches 31 years of age.

What are the benefits of using an RESP to save for education?

There are numerous benefits to setting up an RESP. Calgary families can put aside savings, as well as supplement the funds in the account through certain grants, benefits and programs.

First of all, it is often helpful to have a dedicated savings account or fund when it comes to saving for large expenses over time.

Not only is an RESP a clear way to put aside funds for a child’s education, but some of their contributions may be supplemented through various programs. For example, the Canada Education Grant matches 2o% of the first $2 500 contributed to the savings plan per year until the child reaches their late teens.

  • In other words, when the subscriber meets this contribution threshold, it can boost the funds in the child’s account by $500 per year, up to a total limit of $7, 500 contributed by the CEG.

Certain provinces also offer grants, benefits, or incentives such as tax credits when parents, guardians, or family members set up and contribute to a future student’s RESP.

Additionally, the $500 Canadian Learning Bond is available for children of families who are eligible to the National Child Benefit Supplement

Are Contributions to RESPs Taxed?

While RESPS can accumulate tax-free, withdrawals are taxed. They are taxed to the beneficiary, usually at a lower rate than they would be if they were taxed in the subscriber’s name. This is because when the beneficiary is making withdrawals from an RESP they are usually studying full-time and subject to a lower tax amount.

What happens if a subscriber contributes to an RESP but the beneficiary decides against using it?

Some students might decide against pursuing post secondary education, and others might be in a situation where they fund their studies through scholarships. At other times, a student might not use the entire amount in the RESP: for example, a family might have prepared savings in case the student went to school away from home, but the student ultimately chose to stay home while they study.

While funds in an RESP must be used for educational expenses, they can be converted or passed to another beneficiary in the event that the beneficiary does not want to use the funds.

There are several options for these situations. It is possible to convert an RESP into a different type of account, such as a Registered Retirement Savings Plan (RRSP) or a Registered Disability Savings Plan (RDSP), although there are certain requirements surrounding excess contributions. It is also possible to change the beneficiary of an RESP. However, if the beneficiary is not a sibling of the original beneficiary or a relative of the subscriber, the transfer may create an excess contribution, which would make it subject to a tax.

Learn More

For more information on RESPs, contact us at 403.299.1290.


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