Crain & Schooley Education Savings Plans

How to Save for your Child’s Education

The cost of post – secondary education is rising, and it is becoming more important for parents to plan ahead for their child’s education needs. Using an RESP (Registered Education Savings Plan) is a smart way to save for these needs. An RESP is a tax deferred education savings vehicle through which the federal government allows you to save money for someone’s education. There are a variety of plans to consider, and details are listed below.

Individual Plans Vs. Family Plans

An Individual Plan allows you to choose one beneficiary, whether they be related to you or not, to receive the savings when they are due. In a family plan, you may have more than one beneficiary, but they must be under 21 and related by blood or adoption. Please speak to your Crain & Schooley Financial Advisor for more details.

What You Need to Know

• You can contribute for up to 21 years.
• You can contribute up to $4,000 each year for each child up to a maximum of 21 years.
• The plan must be closed within 25 years of opening it.
• These contributions are not tax deductible.
• This money can be used for anything that will assist your child during his or her studies, including accommodations, books, and tuition, among others.
• You can take out your contribution at any time, but the growth amount can only be withdrawn if your child is enrolled in a qualifying education program.
• It will be taxable to your child as “other income”.
• If your child finishes school and there is money left over, you can name another beneficiary.
• Your RESP will mature in 25 years. If there is money remaining, you can request that it be returned to you, your child, or be transferred to another account. If certain conditions are met, you can transfer up to $50,000 of your accumulated RESP income into your RRSP.

Start Early!

The cost of education is rising dramatically. If you start investing early in your child’s life, you will have the power of compound interest on your side. Speak to your Crain & Schooley Financial Advisor for more information on ensuring your child’s education is covered.