By Farhana Uddin and the Sun Life team
Are your loved ones looking for gift ideas for your children? Why not a gift that will help finance their studies? They can do this by contributing to RESPs.
You are wondering how to pay for your children’s education? It is well known that studies are expensive. According to Statistics Canada, tuition fees for undergraduate programs reached an impressive $6,693 on average for the 2021-2022 academic year. Besides, you can expect the bill to increase further in the years to come. That’s not to mention other expenses (textbooks, clothes, housing, food, transport) or even studies after the first cycle.
Of course, they can take advantage of student loans. But this debt could become a burden they will carry for years.
Do you have a strong network of close friends and relatives who care about your children’s future? If so, there is a way for them to help.
Tell your family and friends that you have opened an RESP for your child. Why? Because they can contribute anytime. But they still need to know about it.
Mr Griffith’s advice: “When you discuss the RESP with them, explain to them how it works. And, above all, highlight the contribution of their contributions. Tell them about colleges or career choices your kids might be considering. This way, your loved ones will feel more concerned about your goal. »
Send your loved ones the video. Simply put: what is an RESP? In less than 2 minutes, they will know what it is.
Can my relatives and friends contribute to an RESP?
Yes. Griffith recommends that they do so by one of the following means:
- You collect the money yourself and put it into a family RESP.
The advantage of the family RESP is that there is only one account for several children, explains Mr Griffith. Therefore, if one child does not go to college, the others can still use the money. In addition, having everything in one consolidated plan makes it easier to track contributions.
Are all children eligible for subsidies if there is only one plan? “Yes, the government sets the Canada Education Savings Grant (CESG) based on the number of beneficiaries associated with the account. The CESG does not depend on the number of accounts associated with a beneficiary,” says Griffith. To make it possible to add beneficiaries to an existing family RESP:
children must be under 21;
the step-parents must have adopted their spouse’s children.
“You don’t need state-of-the-art digital tools,” says Griffith. On birthdays and major holidays, relatives often give money (cash, checks, transfers). All you have to do is deposit it in a family RESP. It’s that simple. »
Note that government grants vary from province to province.
Learn more about RESP-related government grants and incentives, including those in Quebec.
- Your relatives or friends open an individual RESP themselves.
If someone wants to make regular contributions, they can open an individual RESP for the child in question. “That person can then contribute directly to that RESP. It doesn’t have to go through you every time,” says Griffith. However, he advises proceeding with caution in this case.
“When opening individual RESPs, all contributors must agree with the parents on the number of contributions,” says Griffith. Why? Because the contribution limit is $50,000 for life for all accounts. “When you multiply RESPs for the same child, you can contribute too much without realizing it. »
When is the best time to collect the money?
Griffith recommends doing this on occasions when your loved ones are likely to give gifts.
Birthday parties. Indicate that people who wish can offer money for your child’s RESP in the invitation.
Prenatal party (shower). If it’s no surprise, ask the host to invite those present to help with the child’s education. When he is born, you can put the money into an RESP. Note: It is impossible to open an RESP before the child has a social insurance number. You can request this number as soon as the child has a name.
Holiday season. Let your loved ones know that any cash gift will benefit your children’s education. If someone asks you for gift suggestions, take the opportunity to tell them about the RESP.
Graduation. This is a great way to celebrate this milestone! The CESG is available until December 31 of the year of his 17th birthday.
You may be a little uncomfortable making such requests. But your loved ones will be happy to know that their money is
