Have you ever felt worry, apprehension, or even dread at the thought of sending your child to college or university? You might have worried about sending your child (or children) away from home and into the larger world. You might have thought they weren’t ready. Or, as many parents do, you might have been worried about how you would afford tuition bills. When it comes to that last concern, there is a way to help – sign your child up for a heritage RESP or Heritage Registered Education Savings Plan.
Below are five facts you need to know about Registered Education Savings Plans. So take a look and decide if they’re for you and your family.
#1 – Income from a Registered Education Savings Plan is taxable
Taxes are a little complicated when it comes to RESPs (aren’t taxes always complicated?) because while you as the parent aren’t taxed on what you contribute to your child’s RESP…your child will be taxed on what they withdraw. Added to this is the fact that you won’t receive a tax deduction on any funds you invest in the Registered Education Savings Plan. Just make sure your teen or young adult is aware of the taxes they have to pay so that they can move forward, using the RESP and knowing what’s expected of them.
#2 – Your Registered Education Savings Plan shouldn’t have to go to waste
If you have more than one child and one of them doesn’t qualify for their RESP (or doesn’t want to take advantage of it for one reason or another), don’t worry! The plan can be transferred over to another one of your children. This may also work with cousins, friends, nieces, and nephews so make sure you take advantage of this fact if needed.
#3 – Your child will need to attend a specific school
No, that doesn’t mean your child will be locked into one particular school in order to receive the benefits of a Registered Education Savings Plan. Rather, it simply means that your child will need to attend one of the colleges or universities that are approved for heritage education funds RESP beneficiaries – and then also participate in an academic program that qualifies, RESP-wise.
#4 – You will likely get help from the government
The government can contribute funds (in the form of grants) to your child’s Registered Education Savings Plan and will, in most cases. Heritage RESP can be a bit technical, figuring out how best to optimize your investments so that the government will grant the largest amount of money possible for your child’s education. But never fear – your financial advisor will be able to talk you through all the different choices and decisions you need to make.
#5 – You can have more than one child as a beneficiary of one savings plan
If, as mentioned earlier, you have more than one child, you might want to take advantage of this fact. Having multiple children attached to a Registered Education Savings Plan could save you a headache when it comes to juggling multiple savings plans, not to mention recording and remembering how much you contributed to each one.