Types of RESPs

• Individual Plan – only one beneficiary – no relationship requirement with subscriber(s).
• Family Plan – one or more beneficiaries – each beneficiary must be connected to each subscriber by blood relationship (as defined in the Income Tax Act) or adoption.

Beneficiary

• Individuals must have a Social Insurance Number and be a Canadian resident.
• In an Individual Plan, can be anyone, including the subscriber.
• In a Family Plan, each beneficiary must be connected to each subscriber by blood relationship or adoption and must be under 21 when the plan is entered into.
• Only certain beneficiaries are eligible to replace another beneficiary in a Family Plan. The same rules apply to the Individual Plan in order to avoid tax and CESG implications.

Subscriber

• Can be joint with spouse/common-law partner.
• Must have a Social Insurance Number.
• In an Individual Plan, can be anyone, including the beneficiary.
• In a Family Plan, each subscriber must be connected to each beneficiary by blood relationship or adoption.

Contributions

• Lifetime maximum contributions to all RESPs per beneficiary is $50,000 (excess contributions are not permitted and subject to a 1% penalty).
• Contributions are not tax deductible however earnings are tax sheltered until withdrawn.
• Excess contributions which did not attract CESG in the year cannot be carried forward to attract CESG in a subsequent year.

Canada Education Savings Grant

• A great incentive to save
• 20% on the first $2500 contribution amount each year. The annual limit ranges from $400 to $500 depending on the net income of the child's family.
• If the beneficiary has unused CESG contribution room, additional grant can be paid.
• Lifetime maximum per beneficiary - $7,200.
• CESG payments do not affect the annual and lifetime RESP contribution limits.

Eligibility for Grant

• Contributions must be made prior to the end of the year the beneficiary attains age 17.
• The beneficiary must be a resident of Canada and have a Social Insurance Number.
• RESP beneficiaries age 16 or 17 years are eligible only if:
  • a minimum of $2,000 RESP contributions have been made and not withdrawn for that beneficiary before the end of the year the beneficiary attains 15 years of age 
  • a minimum of $100 in annual contributions have been made and not withdrawn for that beneficiary in any 4 years before the end of the year the beneficiary attains 15 years of age  

It is important to note that there are situations where the grant would have to be repaid. Contact your credit union for full details.

Educational Assistance Payments (EAP)

• It is intended that all earnings in the RESP, as well as the CESG received, will be used for education related costs at a qualifying post-secondary educational institution.
• Earnings are sheltered from tax while in the RESP plan. Both earnings and CESG will be taxable when withdrawn by the Beneficiary.
• Withdrawal requests for EAPs must be accompanied by proof of enrolment in an approved education program.
• EAPs are limited to $5,000 in the first 13 consecutive weeks in a qualifying educational program.

Investment Options

• New Plan - No minimum deposit
• Subsequent Lump Sum Deposits:
  • Term $100
  • Variable rate - no minimum deposit (for bi-weekly or montly electronic deposits, the minimum is $25)
  • Fixed
• Quarterly statements