RESP stands for Registered Education savings plan which is initiated Canadian government to help parents save certain amount of money for their kids and their future education. When compared to other financial education plan it helps you save more money for expenses. In RESP you place money in your account and it grows by the years and when your child is ready to attend the university, he or she can withdraw the money from that account.

RESP Calgary


How Does RESP Works?

First thing that you need to do is to open a RESP bank account for your child and you have to contribute or place money always. You should define the interval or set period where you can always contribute some money, whether it is monthly, weekly or annually. As per Canadian RESP policies, maximum of 50,000 Canadian dollars you can contribute to it.

You can also start saving right after from your child birth and to register in RESP, you need to get SIN (social insurance number) for your child. You can learn more about RESP Calgary here.

The good thing about RESP plan is that multiple people can contribute their sum to a single account whether the person is grandparents, uncle or aunt or anyone who is related to you by family blood.

RESP plans are similar to RRSP or TFSA plans which are also initiated by Canadian government to encourage savings and financial investment to their citizens.

There are certain rules on when your child can withdraw these amounts. The first withdrawal eligibility starts when your child enrolls in secondary education. The amount can be fully withdrawn with interests.

The good thing about RESP is that you can send unused amount to your RRSP and TFSA account. In order to maximize your RESP savings, you should start saving and contributing amount as soon as possible.

How Much Money You Can Contribute to RESP?

You can contribute money to RESP your whole life and the limit is 50,000$ per account. There is no defined limit of contribution on how much money you should add annually.

As per the most financial experts, the annual contribution of RESP should be 2500$ dollar.

Benefits of RESP

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1.       Reduction of financial burden on your children when they achieve secondary and post-secondary education.

2.       Canadian government provides 20 % of legal grant up to 500 $ per year.

3.       It will also help parents to get rid of future financial burden.

4.       Tax savings.

5.       Flexibility.

6.       Tax sheltered growth.

7.       Fully access to Canadian learning bond and the Canada education savings grant.

8.       You can increase savings by accumulating your compound interest.