Education Savings Plans (RESPs)
SAVE FOR YOUR CHILD’S EDUCATION...AND FUTURE.
Kids grow up so fast, and before you know it, college (and tuition fees) is right around the corner. Our experienced team will help develop an education savings portfolio for your kids that grows as quick as they do.
Start with a Registered Education Savings Plan (RESP). An RESP is a government-approved plan to help you save for your child’s post-secondary education to a maximum of $50,000. Income earned within the plan is not taxed until it's withdrawn.
Plus, we can show you some great government incentives to make saving for their tuition, easier.
Advantages of an RESP
- The Canadian Education Savings Grant provides additional education funding.
- Income earned within the plan is not taxable until the beneficiary enrolls in post-secondary education and withdraws funds for educational purposes as Education Assistance Payments. These payments are taxable to the beneficiary at his or her marginal tax rate.
- Long-term planning for a beneficiary to attend a post-secondary institution.
- RESPs are available as individual or family plans.
- Investing in an RESP will assist your family to have more financial freedom to choose their future. By starting now, you can grow your education funds by making affordable, convenient monthly deposits. Planning tody for tomorrow is the smart way to realize your family's education goals
RESP CONTRIBUTION LIMITS
- Lifetime - $50,000 per beneficiary
The subscriber is the registered owner of the plan and can be an individual or an individual and his/her spouse. Only the subscriber can make contributions to an RESP and these contributions are not tax deductible.
The named beneficiary is eligible to receive the Educational Assistance Payments from the plan. There is a limit of one beneficiary per plan, except under a Family Plan, which provides for multiple beneficiaries. The beneficiaries of a Family Plan must be "related" to the subscriber(s). A social insurance number for the beneficiary is required and they must be a resident of Canada.
Canada Education Savings Grant (CESG)
The CESG program allows eligible RESP beneficiaries to receive grant monies based on the annual contributions paid into the plan. The government will contribute 20% annually on the first $2,500 deposited into an RESP for children up to age 17*.
All children under the age of 18* and resident of Canada automatically accumulate CESG contribution room.
- Annual CESG Maximum: $500 per beneficiary
- Lifetime CESG maximum: $7,200 per beneficiary
*Note - Some restrictions apply for RESP beneficiaries' age 16 and 17.
Education Assistance Payments
Educational Assistance Payments may be drawn from the RESP to cover expenses associated with the pursuit of higher education in a qualified program - tuition fees, textbooks, room and board, etc. These payments are taxable to the beneficiary.
If Beneficiary Doesn't Enroll in Post-Secondary Education
If the beneficiary does not enroll in post-secondary education, you have the following options for the plan:
- Change the Plan Beneficiary.
- Transfer funds to another RESP where you are the subscriber.
- Collapse the Plan - If you choose this option, you will have to return the unused CESG monies to the government. The principal monies are considered a refund of contributions and can be withdrawn without penalty.
The following options are available for disbursement of income earned within the plan:
- Transfer funds to the subscriber's RRSP or to a spousal plan.
- Withdraw the funds.
- Transfer funds to a Designated Educational Institution
Qualified Post-Secondary Institutions
Most Canadian post-secondary institutions and programs, including correspondence courses, qualify for the purpose of receiving RESP Educational Assistance payments. Certain foreign post-secondary institutions may qualify.
For more information drop in to your local branch.
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The Legal Stuff:
*Terms and conditions apply. All principal and interest is 100% guaranteed by the Credit Union Deposit Guarantee Corporation, excluding common shares, investment shares, and mutual funds. All rates and products are subject to change without notice.
Online brokerage services are offered through Qtrade Investor, a division of Credential Qtrade Securities Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual funds and other securities are not insured nor guaranteed, their values change frequently and past performance may not be repeated.