Marta received an inheritance of $20 000 and wants to allocate it towards her six-year-old son's education in the most effective manner.Which of the following considerations will have the greatest financial impact?
A)Contributing to an RESP in such a way as to collect the maximum Canada Education Savings Grant
B)Benefiting from the tax deferral in an RESP account as quickly as possible
C)Applying for the Canada Learning Bond as soon as possible
D)Collecting the maximum Educational Assistance Payments in the RESP account

Question

Quizplus · Accepted Answer

Contributing to an RESP in such a way as to collect the maximum Canada Education Savings Grant will have the greatest financial impact as it allows for a matching grant of up to $500 per year, increasing the overall savings for the child's education. This compound effect can result in significant growth of the original amount invested over time. Benefiting from the tax deferral in an RESP account as quickly as possible and collecting the maximum Educational Assistance Payments are also important considerations, but the grant from the CESG can provide a larger immediate boost to the education savings. Applying for the Canada Learning Bond is also beneficial, but may not be applicable for every family depending on eligibility criteria.

Marta Received an Inheritance of $20 000 and Wants to Allocate