There are several factors you need to consider when you apply for a registered education savings plan. This will not be like your typical normal savings. The primary objective should be to make sure you only go for the best education savings plan that covers all your education fields. And to manage that, there are a couple of things to look into to ensure you have exactly what you heritage Resp plan for.
There are many education savings plan options you can choose from. And which can confuse you and not be of much help especially if you choose the wrong plan. So, you want to be careful when making your choice on this matter. This article has summed up five critical factors you must consider before deciding about which registered education savings plan RESP to go for. Keep reading to find out more.
1. The range of education covered
The first thing you need to look into is the range of education that the education savings plan covers. Different heritage education funds savings plans cover different education levels. The levels include primary, secondary, college, plus a wide range of other tertiary education. By tertiary education, we mean all the education levels that include part-time and full-time post-secondary education and training provided afterwards. There are also education savings plans available for children with physical, learning, and intellectual disabilities. So, knowing the best education savings plan option to choose is very important.
2. The range of education-related expenses covered
Some education savings plans cover for uniforms, tuition fees, books, student union fees, materials, and travel expenses to get to and from the school. Other plans even have living allowances. This is especially beneficial to the students who live away from home. Plus, no proofing of expenditure is required. You may also want to look into other factors like residential boarding costs, the rent, and other accommodation expenses and if the plans cover them too.
3. Tax benefits
Different education savings plans operate differently. When it comes to tax, some plans operate as ‘scholarship plans.’ This allows for certain tax advantages that are not available in other savings products. Some plans even offer easily accessible and tax-free withdrawals which can be advantageous.
4. The unit prices
Different education savings plans calculate their savings and investment options differently. You want to check how the savings are valued after being calculated and how it will affect your education savings plan. The value of your assets held in the options can rise or fall. And this will lead to a concurrent fall in the unit prices. You now only need to know how it impacts your savings.
5. Switching advantages
You also want to check whether the heritage education funds and savings plan you want to apply for allows for you to easily switch between savings and investment options. And whether you can do this without incurring and personal tax impacts. Yes! Some education saving plans have this option. But not all of them. So, you might want to do your research before jumping into any plan blindly.