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| Build up a tax-sheltered fund to finance
a child's post-secondary education. A Registered Education
Savings Plan (RESP) is the ideal financial vehicle to meet
the job market's education requirements and help you defray mounting
education costs. Doesn't matter which company you start your RESP,
the following are the benefits - You are eligible for a govt. grant
upto $7200, for each child lifetime.You receive the grant based on
your family net income, 20% on your annual contribution of $2000 to
a maximum $400 per year for those families whose net income is $72,756
or above . If your family income is between $36,378 to $72,756, on
the first $500 of contributions, you will get 30% grant and on the
balance 20% grant to a maximum of $450 per year . If the family income
is under $36,378, on the frst $500 you are eligible for 40% grant
and on the balance 20% to a maximum of $500 per year. However it may
be noted that the maximum grant a child could get lifetime is $7200.
The above numbers are applicable for the 2006 contribution year. |
| Besides the grant, the federal government.
introduced Canada learning bond with effect from 2004. The qualification
requirement is the child should be born after 1st Jan, 2004 and the
family should be receiving the National Child Benefit (NCB). An amount
of $500 is paid as soon as you start an RESP, and thereafter every
qualifying year $100 paid into the plan to a maximum of $2000 in total
per child. |
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| Please check before you enrol for
RESP, is the company enrolled for the Additional grant and CLB because
out of the 53 RESP providing companies many are not enrolled for these
additional benefits , hence you may not get them. |
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| Basic Principles to Remember |
| The sooner you begin to invest, the higher the amount
that will be available for your child or grandchild to assist them
in their post-secondary studies. |
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The following table is an excellent illustration of the high rate
of return obtained with RESP investments in comparison to non-registered
plans. (Example of a $100 monthly contribution until age 18 with an
8% annual interest rate) |
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Your
child's age: |
Non-registered
investment (without the CESG and taxable at 50%) |
RESP
(including the CESG) |
1
year old |
$29,048
|
$55,982
|
2
years old |
$26,752
|
$50,426
|
3
years old |
$20,381
|
$36,109
|
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Advantages of the RESP |
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- Saving for education in a tax sheltered investment
- Eligible for the Canada Education Savings Grant (CESG) to add
extra amount of $7200
- Possibility of transferring investment income upto $50,000 into
your RRSP if the child does not pursue post-secondary studies,
provided that you have the contribution room available in your
RRSP
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|
Family RESP |
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These plans can have one or more beneficiaries. However, each beneficiary
must be connected by blood or adoption to each living subscriber under
the plan or have been connected to a deceased original subscriber,
and be under 21 when named. Please note that contributions to this
plan can be made until a beneficiary turns 21. |
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Group RESP |
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Group plans are operated on a pooling principle where the beneficiary
named under a contract by a subscriber will receive Educational Assistance
Payments when enrolled in a qualifying program but if the beneficiary
fails to qualify for payment, the earnings are distributed among other
beneficiaries of the same age who do qualify. Contributions to a Group
plan are calculated by the Foundation’s actuary. In most group
plans, the client has the option to opt out to a more flexible single
plan at maturity. |
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Scholarship Plan |
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We have a scholarship plan wherein which for a new
born child if you start the optimizer plan, the subscriber contributes
$4000 per year and 10.5 years you complete contribution to $42,000-
which is permissible under CCRA rule. The potential value of the plan
as per the 2005 payout is $220,354.17 . |
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Insurance Plan |
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You can have a insurance plan with all the above mentioned
benefits and the money is invested in funds , depending on your risk
tolerance, plus you are eligible for education bonus of up to 15%
of the total monthly contributions paid into the RESP. The bonus varies
according to the beneficiary's age at the time of enrolment. |
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| To know more about the program give us
a call at 416-283-8899 and one of our friendly customer
service representatives will put you in contact with a authorized
representative. |
