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Top 10 Reasons to open an RESP

by Maxine
Posted August 1 2010 12:45am
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These are the top ten reasons for you to open an RESP for your child(ren):

  1. You gain access to government grants that provide you with additional money towards your child’s post-secondary education.
  2. Taxes are deferred. Earnings on RESP investments accumulate without tax.
  3. When the accumulated income is paid out from the RESP as Education Assistance Payments, it will be taxed in your child’s hands. Your child will likely pay much less tax than you would on this income. 
  4. Friends and family can contribute to your child’s RESP and help the savings grow.
  5. Canada Learning Bonds allow those who qualify for the National Child Benefit supplement to receive up to $2,000 towards their post-secondary education.
  6. There are flexible options at the time of maturity. 
  7. Post-secondary education is growing increasingly expensive - RESPs help ensure that your child receives the education he or she wants.
  8. RESP accounts can remain open for up to 36 years, so if your child chooses to defer his or her education plans after high school you can still use your RESP money when the time comes.
  9. With a Family Plan you can transfer your contributions between siblings if one chooses not to attend post-secondary education.
  10. Probably the most important reason to open an RESP right now is to assure you are financially ready to support your child’s education. Starting now ensures minimized stress on your finances. The earlier you invest, the greater the dividend for you and your child when the time finally arrives to head off to college or university.

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