Why not make your next baby gift an RESP. Before you start wondering whether I mean RRSP, RESP is short for a Registered Education Savings Plan. If any baby gift ever made sense, this is it. What better gift can one give to a baby than one that will ensure a child’s post-secondary education is secured? I can’t think of any, and here are my reasons.
1. It’s a Great Surprise
While everyone is excited about the toys and other fun stuff as gifts to a baby, the parents will be pleasantly surprised by your heritage RESP gift. In fact, you will catch everyone by surprise, and the words “how thoughtful and kind” will ring musically true in your ears.
2. It Forces Parents to Set Up an RESP
An RESP gift acts as an incentive to a parent to set up an RESP for their child. While your role may be limited to getting them into the program, they will have to maintain the RESP until it matures. They may love or hate you for ‘forcing’ them to do the right thing, but one thing is certain: at one point or the other, they will appreciate your thoughtful gesture.
3. RESP Can Cover Almost Any Post-Secondary Education
The beauty with an RESP is it can cover almost any post-secondary education. You don’t have to worry if your child will make it to University because your RESP can still be applied to other post-secondary endeavours.
4. Contributing to a Child’s RESP Is Easy
You don’t need gift certificates to contribute to a child’s RESP. As long as a child qualifies, you can either set up your own RESP account on their behalf or write a cheque to help the parents open an heritage RESP account for their child. Pick whichever option you feel most comfortable with. For instance, you can write a cheque to the parents with the word ‘RESP’ in the memo.
5. RESPs Attract Grants
For low-income families, heritage RESP attracts government grants. To claim these grants, a qualifying low-income family only needs to open an RESP account.
6. An RESP Gift Could Double in Value
While the beneficiary of an RESP gift is the parents and their child, of course, you can at least rest easy knowing your RESP gift is likely to double in value by the time the baby starts dipping into it. This is one gift the parents will remember you by for a long time.
7. An RESP Gift Helps Parents without a CESG
Your RESP gift to parents who are yet to benefit from the Canada Education Savings Grant (CESG) can be a lifesaver. CESG contributes 20 cents for every dollar contributed to a plan. There is, however, a maximum limit of $2,000 per year. Low-income families get higher grants. They can receive up to $500 annually compared to $400 for other families.
An RESP gift definitely makes a great baby gift. It is a beautiful reminder to parents that their child will one day become someone important, and investing in their education is an ideal gift that will never fade away or shrink like the baby toys.Read More →