Registered Education Savings Plan
A Registered Education Savings Plan (RESP) is like a special piggy bank that is just for your education. You put money in it, and it grows over time. When it's time for you to go to college, you can take the money out of the RESP to help pay for your education.
But, not just anyone can open an RESP for you. Only your parents, guardians, or other adult family members can do it. When they open an RESP, they'll have to provide some important information like your name, birth date, and social insurance number. This is like a secret code that only they know, and it helps keep your RESP safe.
Once your RESP is open, your parents can start putting money into it. When they do this, they get something called a 'government grant'. This is like extra money that the government gives them for putting money into your RESP. It's like when grandma gives you a dollar when you put your allowance into your piggy bank. But, the government gives you more money than grandma!
The government grant is called the Canada Education Savings Grant (CESG). Your parents can get up to $500 every year for putting $2,500 into your RESP. That's like getting 20 cents for every dollar you put in! But, the maximum amount of grant money you can get is $7,200. That's a lot of money!
When you're old enough to go to college, your parents can take the money out of your RESP to help pay for your education. But, while the money is in your RESP, it grows tax-free. That means you don't have to pay any extra money to the government when you take the money out to pay for school.
So, in summary, an RESP is like a special piggy bank that your parents open for you to save money for your education. They put money into it and get a government grant to help the savings grow. When you're ready for college, you can use the money to pay for your education, and you don't have to pay extra taxes on it.
But, not just anyone can open an RESP for you. Only your parents, guardians, or other adult family members can do it. When they open an RESP, they'll have to provide some important information like your name, birth date, and social insurance number. This is like a secret code that only they know, and it helps keep your RESP safe.
Once your RESP is open, your parents can start putting money into it. When they do this, they get something called a 'government grant'. This is like extra money that the government gives them for putting money into your RESP. It's like when grandma gives you a dollar when you put your allowance into your piggy bank. But, the government gives you more money than grandma!
The government grant is called the Canada Education Savings Grant (CESG). Your parents can get up to $500 every year for putting $2,500 into your RESP. That's like getting 20 cents for every dollar you put in! But, the maximum amount of grant money you can get is $7,200. That's a lot of money!
When you're old enough to go to college, your parents can take the money out of your RESP to help pay for your education. But, while the money is in your RESP, it grows tax-free. That means you don't have to pay any extra money to the government when you take the money out to pay for school.
So, in summary, an RESP is like a special piggy bank that your parents open for you to save money for your education. They put money into it and get a government grant to help the savings grow. When you're ready for college, you can use the money to pay for your education, and you don't have to pay extra taxes on it.
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