November 15, 2008
By W. Michael Thomas CFP, CLU, CH.F.C., R.F.P.

Many people, especially those with young children, struggle every year with a tough decision: do I save for retirement through Registered Retirement Savings Plans (RRSPs), or do I save for my children’s education through Registered Education Savings Plans (RESPs)?

Worry no more, because there is a way to do both.

First, make your RRSP contribution before the deadline each year and then use the resulting tax refund to make an RESP contribution. That’s the ultimate “double-dip.” Here is why it works so well:

When you make your maximum allowable RRSP contribution, you may enjoy tax savings that can be applied towards establishing or adding to your childrens’ RESPs. The federal government’s CES grant program provides a matching grant for each RESP contribution made for an eligible child. The basic CES grant is worth 20 per cent on the first $2,500 of an annual RESP contribution, or $500 per year. Families with children born after December 31st, 2003, who also receive the National Child Benefit Supplement, may also qualify for additional funds through the Canada Learning Bond.

If you have any questions, please contact Michael Thomas at the address below.

W. Michael Thomas is a partner with The Investment Guild, endorsed provider of the HortProtect Group Insurance Program and is a director of Ontario Horticultural Trades Foundation.

The Investment Guild/HortProtect
11 Allstate Parkway
Markham, ON L3R 9T8