The Two Most Popular RESP QuestionsSubmitted by Robert McEachern & Scott McEachern on January 16th, 2018
Ringing in the New Year always brings out the best of intentions in us. We take time to set personal goals in growth and development, evaluate what we’d like to improve and take time to focus on our personal goals.
This year has been no different. I’ve spoken with a flurry of families who have decided that this is the year they’ll start an RESP for their child or grandchild (because grandparents like to help to!) They are tired of their children getting older, yet their education funding goal is no closer to being achieved.
So we chat.
Is the Registered Education Savings Plan (RESP) the best vehicle to use for investing for education?
My response, usually rhetoric in nature (and in tone of voice used) is “where else can you get a guaranteed 20% return on your investment in the first year?”
The answer is obvious: Absolutely no where!
The Government of Canada will match 20% of you contributions you make to an RESP to a limit of $500/year and a lifetime limit of $7,200. Sweet!
What happens if my child doesn’t go to school?
Great question! If you have an individual plan or family plan (the only two types of plans we sell) you have some flexibility in transferring to another child, to your RRSPs, or withdrawing the money you put in and paying tax on any earnings. Your money DOES NOT disappear, get forfeited, or go to some stranger child. For your specific situation, it’d be easiest to have a conversation to go over your options.