Education Planning
Registered Education Savings Plan (RESP)
A post-secondary education is critical in an increasingly competitive job market. With the costs of higher education ever increasing, planning now for your family is essential, and a Registered Education Savings Plan can help!
A Registered Education Savings Plan (RESP) is a government approved plan for the purpose of providing post-secondary education funding for a beneficiary of your choosing. Income earned within the RESP is tax-sheltered until it is withdrawn, and the federal government partners with families by providing grant money deposits to your RESP through the Canada Education Savings Grant (CESG). If payments are withdrawn by the beneficiary, he or she will usually have a lower marginal tax rate. Education Assistance Payments may be drawn from the RESP (taxable to the beneficiary) to cover expenses associated with the pursuit of higher education in a qualified program such as:
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Tuition fees
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Textbooks
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Room and board
Investing in an RESP will give you and your family members more financial freedom when making the choices that will affect their futures. By starting now you can grow your education funds by making affordable, convenient monthly deposits.
Contribution Limits:
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Lifetime: $50,000 per beneficiary
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A Subscriber may contribute any amount provided the total contributions do not exceed the maximum lifetime limit
Subscriber:
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The subscriber is the registered owner of the plan and can be an individual, or an individual and his or her spouse.
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Only the subscriber can make contributions to an RESP. These contributions are NOT tax deductible, but income earned by deposits is tax deductible.
The Named Beneficiary:
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The named beneficiary is the young person eligible to receive the Educational Assistance Payments from the RESP.
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Anyone to be named as an RESP beneficiary must have a Social Insurance Number.
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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), either by blood relationship or adoption to each living subscriber or any deceased original subscriber.
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Each family plan beneficiary must be less than 21 years of age at the time he or she is named as a beneficiary. When one family plan is transferred to another, a beneficiary who is 21 years of age or older can still be named a beneficiary to the new plan.
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What if your named beneficiary doesn’t pursue post-secondary education? You can change the plan beneficiary, transfer the funds to another plan where you are the subscriber, or collapse the plan.
Investment Options:
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Variable rate deposits calculate interest on the daily balance and paid semi-annually on June 30 and December 31. The minimum initial deposit amount is $500, and subsequent deposits require a minimum of $100; Regular bi-weekly or monthly electronic deposits must be no less than $25; Quarterly, semi-annual or annual deposits must be no less than $100.
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Fixed term deposits (1-5 years) require a minimum of $500 per deposit (initial and subsequent) and are non-redeemable. Interest is guaranteed for the term of the deposit, calculated annually and paid on each anniversary date and at maturity.
Canada Education Savings Grant (CESG)
The federal government’s 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 ($500) deposited into a Bayview RESP for children to the end of the year in which a child reaches age 17 (some restrictions apply for beneficiaries aged 16 and 17). All children under the age of 18 who are resident in Canada automatically accumulate CESG contribution room.
Contribution Limits:
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Annual CESG maximum: $500 per beneficiary
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Lifetime CESG maximum: $7,200 per beneficiary
In the event that an RESP beneficiary does not pursue post-secondary education and the plan is to be collapsed, any unused CESG deposits would be returned to the government.
