1. Come prepared with questions. What fees are you expected to pay, and when? Do you have a choice about when and how much you contribute? When and how will you receive payments from the plan? What if your child does not go on to post-secondary education, or does not complete their program? What if you sign up for a plan, but change your mind?
2. Bring the appropriate documents. You need to bring your social insurance card, your child's social insurance card and your child's birth certificate or permanent resident card to open an RESP.
3. Set up a direct monthly saving plan. Even it is $25 per month, start saving early and on a regular basis.
4. Know where you want to put your money. When you open an RESP, you will be asked how you want to invest your savings. The savings can typically be put into a no-risk savings account, a low-risk GIC or mutual funds with varying levels of risk.
Investor Education: RESPs
5. Determine whether your child is eligible for the Canada Learning Bond (CLB). To be eligible for the CLB, your child must be born in 2004 or after and you must be receiving the National Child Benefit Supplement as part of the Canada Child Tax Benefit. This is usually for families with a net income of less than $40,970, but this amount changes each year. For example, if your child was born in 2004 and you have been receiving the National Child Benefit Supplement since then, you could open an RESP now, apply for the CLB and get $1,000 deposited into the RESP from the government.
6. You don't have to make a deposit. If you think you are eligible for the CLB and don't have any money to contribute to your child's RESP, you can still open one and apply for the CLB.
7. The government of Canada will match your savings inside an RESP. The match is called the Canada Education Savings Grant (CESG). Everyone gets the 20-per-cent match on $2,500 contributed per child per year, but if your income is lower, you can get a 30-per-cent or 40-per-cent match on the first $500 saved each year. On the first $500 saved per year, the government will contribute:
· $200 (40-per-cent match), if your net family income is $40,970 or less;
· $150 (30-per-cent match), if your net family income is between $40,970 and $81,941.
8. Make sure that bank has applied for the appropriate match (CESG) and the CLB. Often clients do not know about the additional CESG match or the CLB and sometimes the bank fails to apply for it. You can receive a correction on your match contribution retroactive three years if you have not been getting the right amount.
9. Group scholarship plans have their own rules regarding RESPs. For example, you may be able to cancel the plan within 60 days of signing, but there may be fees involved if you have waited longer and cannot follow through with payments. Make sure you read the fine print.
10. To learn more, visit canlearn.ca or talk to a representative at your financial institution.