Understanding the Role of RESP in Calgary: Everything You Need to Know

 

What is a RESP and Why is it Important in Calgary?

Registered Education Savings Plan (RESP) is a tax-deferred savings plan that helps parents save for their children's post-secondary education. It allows parents to contribute a certain amount each year, which grows tax-free until the child is ready to attend a post-secondary institution. Once the child enrolls in a qualifying program, the government provides a Canada Education Savings Grant (CESG), which matches up to 20% of the first $2,500 contributed each year to the RESP.

In Calgary, RESP is a popular option for parents who want to save for their children's future education. According to a report by Statistics Canada, the average tuition fee for an undergraduate degree in Calgary is around $7,000 to $8,000 per year. With the increasing cost of education, RESP is an excellent way to plan for future expenses and ensure that your child has the financial support they need to pursue their dreams.

 

Types of RESP Plans Available in Calgary

There are two types of RESP plans in Calgary: individual plans and family plans.

Individual plans are designed for one child and can be opened by anyone, including parents, grandparents, or other family members. In this type of plan, only one child is the beneficiary, and the contributions made are not shared with any other children.

On the other hand, family plans are designed for multiple children and can only be opened by parents or legal guardians. In this type of plan, the contributions made are shared between all the children named in the plan. This means that if one child decides not to pursue post-secondary education, the funds can be used for another child named in the plan.

It's important to note that there are specific rules and regulations for each type of RESP plan, so it's important to consult a financial advisor to ensure that you choose the plan that best suits your needs.

 

Benefits of RESP in Calgary

There are several benefits of RESP in Calgary, including:

Tax-Sheltered Growth: RESP contributions grow tax-free until the child is ready to attend a post-secondary institution. This means that you can earn interest on your contributions without having to pay taxes on the growth.

Canada Education Savings Grant (CESG): The government provides a CESG, which matches up to 20% of the first $2,500 contributed each year to the RESP. This means that you can earn free money for your child's education.

Flexibility: RESP plans are flexible and can be used for a variety of educational expenses, including tuition, books, and living expenses. The funds can also be used at any post-secondary institution, including universities, colleges, and trade schools.

No Minimum Contribution Required: There is no minimum contribution required to open an RESP, and you can contribute as much or as little as you want each year.

Transferable: If the child named in the RESP plan decides not to pursue post-secondary education, the funds can be transferred to another child named in the plan or to an individual plan for another family member.

How to Open an RESP Plan in Calgary

Opening an RESP plan in Calgary is a straightforward process. Here are the steps you need to follow:

Choose the type of plan that best suits your needs: Individual or Family.

Find a financial institution that offers RESP plans: This can be a bank, credit union, or investment firm. It's important to shop around and compare the fees, services, and investment options offered by different institutions.

Provide the necessary documentation: You will need to provide proof of identity and the child's Social Insurance Number.

Make your contribution: There is no minimum contribution required to open an RESP, but it's recommended to contribute as much as you can to take advantage of the CESG.

Choose your investment options: RESP plans offer a variety of investment options, including mutual funds, stocks, and bonds. It's important to choose the investment options that align with your financial goals and risk tolerance.

Set up automatic contributions: Setting up automatic contributions can help you save regularly and avoid missing any contribution deadlines.

Monitor your RESP: It's important to monitor your RESP regularly to ensure that it's on track to meet your financial goals. You can make changes to your investment options or contribution amounts if necessary.

RESP plans are an excellent way for parents in Calgary to save for their children's future education. They offer tax-sheltered growth, free money from the government in the form of the Canada Education Savings Grant (CESG), flexibility in terms of how the funds can be used, and transferability if the child named in the plan decides not to pursue post-secondary education. By understanding the different types of RESP plans available, the benefits they offer, and how to open one, parents in Calgary can take control of their children's future education and ensure that they have the financial support they need to pursue their dreams.