|
The amount of post secondary Education saving is the first step to determine the contribution, which is estimate on projected cost for a four year degree, taking into three percent inflation and portfolio with an after tax return of six percent. Most of the financial advisors regard Registered Education Savings programs as a grate way to save for education costs. You can receive a government grant of up to $500 dollars per year, or twenty percent of your contribution toward your children’s education. If you want to get the full grant that you should contribute $2500 per year per child for eighteen years and end up with an additional $9000.You don’t need to pay tax on the investment earnings accumulating in the plan.
When you turn the money over to your university/college children to cover school expenses, they don’t need to pay any tax at all. RESP is the best reasonable way to save your children’s education. However if your child did not end up going to university/college you had to give back every penny of earnings on the money you had put away, either they had to go to another child to an educational institution. Now you allow you to transfer up to $50,000 of earning from RESP to your RRSP or your spousal RRSP as long as you have the contribution room available. RESP is the best bet for your children’s post-secondary education. RESP is not only you option there is some alternatives too. Open a tax-free saving account and you can put away up to $5000 per year and the earnings accumulate tax free.