3 Benefits of the RESP

 

Benefits of the RESP - The Rising Cost of Education

How the Registered Education Savings Plan can help you prepare for rising costs of post secondary education

3 Benefits of the RESP

• Tax Deferral - Though contributions are not tax deductible, once in the RESP if invested, the assets grow tax deferred.
• The Government Grant - The beneficiary receives a 20% Canadian Education Savings Grant. Example: If you contribute $2500 per year, after 14 to 15 years of contributions (a total of $36,000) the beneficiary will have received the lifetime maximum grant of $7,200.
• Tax on Withdrawal - The EAP (Education Assistance Payment) is the taxable portion of the withdrawal, which often includes grants, income and growth. The EAP is taxed in the hands of the beneficiary (or student) who is usually in a much lower tax bracket than the contributor.

*It is important to be aware of any age, country of residence, or education program limitations to ensure eligibility