What to consider before opening an RESP account?

In general, when you’re opening an RESP account, you would only be looking into the savings part of it and nothing else, and that’s quite normal. After all, RESPs are created for saving for your child’s education, so they can pursue higher education and achieve their aspirations. But before you go ahead and start an RESP account, you should know about some of the rules that are a part of this scheme. If you don’t know them, you may end up getting some surprises that you may or may not like. That’s where this blog post comes in. Here, we will discuss four rules of RESP that you should know before opting for this policy.

4 rules to consider

• There is a limit on withdrawals when it comes to RESPs. This is because the Federal government also invests in this scheme by matching up to 20% of your contribution. If you’re planning to withdraw any of the government grants, for the first withdrawal, the upper limit is $5,000 for the beneficiary who is enrolled full-time in a post-secondary institution. After which the beneficiary would have to wait 13 weeks to withdraw more. You should also know that if a student plans to take a break for 12 months, then the $5,000 limit cap would be applied again.
• The policyholder will have to be Canadians and also will have to live in Canada to have access to the grants of the scheme. So, suppose you have made your annual contribution but are living outside Canada, but your children are in a Canadian university, they will have access to your contributions but not have access to the grants (investment made by the Federal Government).
• You should do a thorough check on the school that you’re enrolling your child into, whether it qualifies and falls under the RESP scheme. This precaution should be taken in regards to the program your child is opting for as well.
• If the beneficiary decides not to attend a post-secondary educational institution, then the subscribers can transfer up to $50,000 of the income to their RRSP accounts. The criteria for this is:
  • The RESP account should be 10 years old
  • The beneficiaries should be at least 21-years old and not currently continuing their education after finishing high school
  • The policyholder should be a Canadian resident

If you want to find out more details on RESP Brampton, then you should get in touch with your local investment broker. They will have all the details and can help you in making a well-informed decision.