WHO CAN HELP YOU
SAVE FOR YOUR CHILDREN’S
EDUCATION?
A PARTNER YOU CAN TRUST.
Would you like to ensure that your children or
grandchildren have the necessary financial
resources to go to university?
Studies shows that a post-secondary education and
training are increasingly important.

In the 2000s:
◦ 65% of new jobs, or almost 2 out of 3, will require a
post-secondary education.
Source: Statistics Canada

First three years of medicine, starting in 2008, dependent single student
Choice #1
Choice #2
Choice #3
$21,450
$31,353
$18,972
Athletic Fees
$0
$237
$246
Health Services Fees
$1,011
$342
$468
Other Fees
$777
$744
$573
Student Association Fees
$408
$336
$384
Tuition /Program Fees
Compulsary Fees :
Books
$2,613
$2,613
$2,613
Supplies
$360
$360
$360
$26,619
$35,985
$23,616
Total Cost
These
amounts do
not include
lodging fees
In fact, full-time students in Canada paid $14,500 on average to cover a year of
post secondary expenses in 2003-2004. That's roughly $58,000 for a four-year program.
Source:CanLearn



Let your children go into debt to pay for their education
Pay or borrow the amounts required while your child is
at university
Save now and be able to offer this opportunity to your
child later on.
The solution?

The Registered Education Savings Plan,
commonly known as the RESP, is the best solution
to save for a child’s education.
Anyone can open an RESP:


Whether you’re parents, grandparents, legal guardians,
family members or friends, you can open an RESP and
offer a gift to a child!
In addition, when you open an RESP, the child will
receive a lovely certificate explaining that someone close
to them is taking care of their future.
◦
◦
◦
◦
◦
To save for your children’s education
To take advantage of the Education Savings (CES) Grants
To accumulates in a tax sheltered plan
To access your contributions
To invest in high-performance investments

The RESP is registered with the
government of Canada so that
the money saved for school can
grow tax-free, until the person
designated as the RESP
beneficiary enrolls in a postsecondary school.
RESP
Contributions
Grants
Income
How much can I save?

For all RESPs for the same beneficiary:
◦ Per year:
 No annual plan contribution limit
◦ Lifetime limit for the plan:
 Maximum contribution plan limit of $50,000
For how long?

Contributions can be made up to the plan’s 31st anniversary
◦ Plan duration: 35 years

Once your RESP is opened, you have many
investment possibilities:
◦ Guaranteed rate fixed-term investments
◦ Mutual funds:
 Bonds
 Canadian equities
 U.S. and international equities

Our RESPs also include a guarantee for sums
invested
RESP
Contributions
Grants
Income

Since 1998 (or the year of the child’s birth)
◦ Each child accumulates $400 (prior to 2007) or $500 in
grant room per year. Thereafter, regardless of whether or
not an RESP is open in the child’s name.
$400 / year
1998
$500 / year
2007
Main federal grant
• 20% on the first $2,500 contributed (since 2007)
• 20% on the first $5,000 if accumulated room
Additional federal grant
• on the first $500 contributed only
* Family
income for
2009 –
Income
bracket
revised
annually
CLB
• Child born after January 1, 2004
• Grant not related to contributions
ACG (Alberta only)
• Child born in 2005 or later
• Grant not related to contributions
QESI (Quebec only)
• 10% on the first $2,500
Enhanced QESI (Quebec only)
• Applicable on the first $500 of contributions only
Net family income*
lower than $38,832
Net family income*
between $38,832 and
$77,664
Net family income*
over $77,664



20%
20%
20%


20%
10%

$500 (first year)
$100 thereafter



$500 (first year) or,
$100 (age 8, 11 and14)
$500 (first year) or,
$100 (age 8, 11 and14)
$500 (first year) or,
$100 (age 8, 11 and14)



10%
10%
10%


10%
5%
RESP
Contributions
Grants
Income
Accumulated income on contributions and on
grants:

Non-taxable as long as there are no surrenders
◦ Will be taxable to the beneficiary when Educational Assistance
Payments (EAP) are made (as income).

If the child doesn’t go to university:
◦ Will be taxable to the subscriber when Accumulated Income
Payments (AIP) are made.
Contributions:
 Surrenders are non-taxable
RESP
Contributions
Grants
Subscriber
Beneficiary
Parents; Grand-parents
Child; Grand-child
Income
•
•
Maximum contribution period = 31 years
Maximum duration = 35 years
End of contributions
Close of plan
Opening of plan
Year
0
COTISATIONS
31
35
Investment in an RESP
70 000 $
Deposit: $2,000/year
Interest rate: 6%
Taxation rate: 50%*
60 000 $
50 000 $
40 000 $
30 000 $
20 000 $
10 000 $
-$
1
2
3
4
Non-registered
5
6
7
8
RESP
9
10
11
12
13
RESP+ CES grant
14
15
16


MY EDUCATION
DIPLOMA
MY EDUCATION




Offered as an individual or family plan
Minimum deposit of $100
Minimum PAC of $25 ($10 per beneficiary for the family
plan)
Investment funds available
ADVANTAGES






Flexible contributions allowed
Eligible to government grants
No annual contribution required
Access to your capital at all times
Tax-free withdrawal of contributions
Possibility to change the plan’s beneficiary at any time
DIPLOMA




Offered as an individual plan only
Minimum mandatory PAC of $25 per month until
December 31 of the beneficiary’s 17th birthday
Minimum lump-sum deposits of $100
Pre-determined investments
ADVANTAGES

Offer an education bonus of up to 15% of the contributions
to the RESP will increase the income paid for education
Eligible to government grants

Access to your capital at all times

Withdrawals of contributions are tax-free

Possibility to change the plan’s beneficiary at any time

$100/month
Years
0
18
$100 x 216 months (18 years) x 15%
(bonus according to age) =
$3,240
You would like to increase your contributions, but
your current budget does not allow it.

Here is a solution that lets you increase the amounts
available in your RESP and receive the maximum
government grant, while staying within your budget!
RESP LOAN


Available for an amount equal to your contract’s
current contributions (up to 100%)
No interest or repayment required until the end of
the plan
◦ However, it can also be repaid at any time
How it Works
RESP
Your RESP loan:
GRANT
$1,000
$200
Your contribution: $1,000
$200
$2,400
By depositing $1,000, you obtain a $2,400 investment for your child’s studies!

IA RESPs
Financial institutions
and fund companies
No annual fees

Annual administration fee
(between $25 and $50)
DIPLOMA and MY
EDUCATION



EAP eligibility in the first study
session, with proof of
registration
EAP determined by the
subscriber
Possibility of AIP
Scolarship Plans



EAP eligibility in the second
year of studies and at age 19,
with proof of school success
EAP determined by the
foundation
Accumulated income paid to
the foundation
EAP: Educational Assistance Payments
AIP: Accumulated Income Payments
The advantage of an IA RESP: FLEXIBILITY







For the 20% (or more) grant
For the education bonus of up to 15% (Diploma)
For tax-sheltered accumulation
To maximize the grant through the RESP loan
To diversify your investments (My Education)
For the flexibility of changing beneficiaries
For the possibility to transfer investment income to your RRSP, if
your child does not pursue a post-secondary education
RESP is the ideal
savings vehicle for
THE
children’s post-secondary
education!