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RESPs Not Just For Kids
The reality of today’s post secondary education environment means that many students are spending years working toward their degree. They may graduate with a bachelor degree, then work for some years before returning to complete a master’s. Others seek specialized training or upgrading as they move along their career path. For these individuals, finances may be a key factor in the decisions they make regarding education.
Many assume that RESP’s are strictly meant for saving for children’s education. This is not the case. Full time students of any age can set up RESP’s through an investment planner. These educational RESP’s are similar to RRSP’s, a type of ‘envelope’ into which other investments such as bonds or mutual funds can be placed. Capital gains taxes are not payable on RESP investments, and RESP’s are not tax-deductible. Full-time students who are not working full time, however, are taxed at a lower rate.
RESP funds can be used for any school-related expenses, including tuition, books, and living costs. If you choose not to use the RESP for schooling, the money can be cashed out or transferred, although any investment gains will be taxable.
Students over eighteen are not eligible for the CESG, the government program that matches each savings dollar up to a maximum of $400 a year. Even so, using the RESP option may be a viable alternative for many, improving our access to that all-important life-long learning. December 31, 2004, is the RESP contribution deadline.
Saving for your education? Get an RESP. Michael Citrome, Montreal Gazette, in the Edmonton Journal, November 20, 2004.