For many people, the primary benefit to signing up for a Registered Education Savings Plan (RESP) is to be able to pay for the post-secondary education of their child or children. But RESPs are actually a lot more flexible than most people would think, and they provide a number of other benefits apart from providing plan holders with the means to pay college costs.
Of course, its value in paying for post-secondary education remains the most important reason to sign up for an RESP. With the costs of education constantly on the rise, RESPs can help families prepare for when their children reach college age. By contributing to an RESP, parents essentially ensure the educational future of their children.
That being said, the other benefits provided by RESPs can be just as appealing. For one thing, they provide tax deferral benefits to subscribers–the people who sign up for such plans. With an RESP, any income earned via interest or investment growth remains tax-free as long as the funds are in the plan. Even when the funds are eventually withdrawn by the beneficiary, the taxes will be negligible. In some cases, the beneficiary may not even have to pay taxes at all.
Beneficiaries may also be eligible to receive an annual sum from the government through the Canada Education Savings Grant (CESG). With this program, beneficiaries will receive an additional 20% of the initial $2,500 contributed to the RESP every year. This grant will pay off a maximum of $7,200 to each beneficiary up to the age of 18. These moneys are deposited into the RESP along with the regular contributions, providing further tax and investment growth benefits to the plan.
There are many other benefits you may be able to get from an RESP provider in Canada depending on the terms in your particular province. You can get more information from an RESP advisor in Canada or from any RESP provider in the country.