As a parent, you may already know about some of the basics about the Registered Education Savings Plan, commonly referred to as RESP. However, there is usually a lot more to RESP than meets the eye. And as parents, you can end up benefiting a lot more by practicing some of the ways to maximize the heritage education funds RESP.
To successfully get more out of your registered education savings plan, you must first educate yourself about the plan and how it works. Today, families can get up to and over $8,400 in RESP for each of their children. For the lower-income families, this amount could go up to even $10,400 per child. But how do you get more out of your child’s RESP plan? Keep reading to find out.
1. Watch those fees
As a parent, you might have also noticed just how much your child’s fees can dent into his/her registered education savings plan. And it can get worse if there are other charges on top of the fees. Charges like the annual administration, set-up, and enrollment are but a few of the fees that can quickly add up and eat up your child’s heritage RESP plan. You can, therefore, shop around for some of the best institutions in your area that do not charge these fees.
2. Seek help from friends
If you are in a position to contribute more to your child’s registered education savings plan, then you can qualify for larger grants. The Canada Savings Grant, for example, adds 20% for the first $2,500 of annual registered education savings plan contributions you make each year. In some cases, it may even be higher. And the total grant can go up to a maximum of $7,200 for each beneficiary. So, if you feel you are not in a position to reach the $2,500, you can always ask for financial assistance from your friends and family members so that you can maximize the grant.
3. Have a flexible plan
It is crucial to note that your child’s educational aspirations may not be what you planned for him/her. So, it is wise to look for an registered education savings plan that does not have any charge flexibility to change beneficiaries to one of your other children should one decide not to enroll to post-secondary education.
4. Save any free money you have available
Some RESP grants require you to contribute to qualify. You can take advantage of this and contribute any free money you have to be eligible for larger grants. This, however, depends on your net family income and your child’s age. And the only catch here is to open a registered education savings plan account.
5. Know who should open the RESP
It is always recommended that the youngest parent be the one to set up the heritage RESP so that the plan can stay open for much longer. So, by the time you consider closing your RESP plan, you will have a decent enough amount that you can transfer to the RRSP tax-free. This is, however, not possible if the subscriber is over 71 years for this is the age limit for registered education savings plan contributions.
Heritage RESP has proven to be a great way to plan for your kids’ education and, to a great extent, also helped parents save a decent amount that they can use later on in life. It is, therefore, wise to want to make the most of it when you can. And the points mentioned above show you how.