Island Savings

Education Savings Plan

This investment plan is right for you if:

  • you'd want to get started in helping your child succeed.
  • you'd like a flexible option for saving for education.
  • you like the idea of getting money from the government for
    education—every penny helps.

Overview

Key Features & Benefits


Give your children or grandchildren a head start on success with a Registered Education Savings Plan (RESP)*. A RESP gives you solid investment management, competitive returns, and the knowledge that your money is working to improve the quality of life for everyone.

  • Contributions made to a RESP grow tax-free until the beneficiary (the student using the RESP funds) enrolls in a qualifying post-secondary program.
  • A lifetime limit of $50,000 per child can be contributed to a RESP.
  • When withdrawing money for educational purposes, any income earned on the contributions is taxed at the beneficiary's rate—usually they'll pay a minimal amount on the withdrawal.
  • Don’t pass up free contributions to your RESP from the government. Your child may be eligible for the BC Training and Education Savings Grant, the Canadian Education Savings Grant and/or the Canada Learning Bond.

Interested in finding out more? Check out our online brochure (PDF) chalked full of great information or come into your nearest branch. You will need Adobe Acrobat Reader to view this PDF document. If you do not already have Adobe Acrobat Reader, click here to download this free software.

Options

Plan Options


Family Plans

These plans can have multiple beneficiaries all of whom must be related to the subscriber. This can include children, adopted children, grandchildren, and brothers and sisters. You cannot include an unrelated person to the subscriber as a beneficiary of a family plan. Family plans allow the flexibility to name one or more children as beneficiaries, and add or change beneficiaries at any time. If one of the beneficiaries decides not to attend a post-secondary institution, other beneficiaries can make use of the funds.

A portion of contributions to the plan must be allocated to each beneficiary, although not necessarily equally. For example you can allocate a greater percentage to an older child who becomes a beneficiary a few years before university to quickly build education savings for that child. Meanwhile, younger children could be allocated less because there is plenty of time until they attend college or university. Contributions for each beneficiary can be made until the beneficiary turns 31.

The CESG is paid into the family RESP in the name of each beneficiary until that beneficiary turns 18. The CESG may be used by any beneficiary, to a maximum of $7,200 per beneficiary.

Most RESPs, family and individual, must be collapsed on or before the last day of their 35th year of existence. This should provide enough time to meet education savings needs of most families, including those with children of substantially different ages.


Individual Plans

These plans have a single beneficiary only who may or may not be related to you. An individual plan is also ideal for one-child families, or for those who require individual plans for each child (for example in a situation of blended families.)

The beneficiary named in an individual plan can be replaced by another—subject to restrictions. With an individual plan, contributions can be made up to the end of the 31st year of the plan’s existence, regardless of the beneficiary’s age.

NOTE: If the beneficiary on an Individual RESP is eligible for the Disability Tax Credit (DTC) as per the Income Tax Act, contributions may be made up to the end of the 35th year after the year in which the plan was opened. The plan may remain open until December 31st of the 40th year following the year in which the plan was opened.

FAQ

Frequently Asked Questions


Who is the beneficiary?

Any child or children named to the account who will eventually receive payments from the RESP.


Who is a subscriber?

This is the person who sets up the RESP account. In the case of a Family Plan, the subscriber needs to be related to the beneficiary by blood (i.e. a parent, sibling, or grandparent). With an Individual Plan, the beneficiary can be anyone, even if they are unrelated to the subscriber.


What post-secondary schools can be funded with a RESP?

The beneficiary can choose any recognized trade, college or university course or program anywhere in the world.


What happens if my child doesn't want to go to post-secondary school?

Plans are allowed to remain open for 35 years from their original inception. If a beneficiary does not immediate attend post-secondary school, consider keeping the plan option should they pursue schooling in the future.

The RESP can be shared with a sibling if they have grant room available – otherwise the grant must be returned to the government if the account is collapsed and closed.

If you close your RESP, you will have to pay tax on the earnings in the RESP (this is called the accumulated income) The grant itself must be returned to the government and the original amount you contributed is not considered to be taxable. You will have to pay taxes on the money that you earned in your plan as interest—it is taxed at your regular income tax level plus an additional 20 percent.



Interested in finding out more? Check out our online brochure (PDF) chalked full of great information or come into your nearest branch. You will need Adobe Acrobat Reader to view this PDF document. If you do not already have Adobe Acrobat Reader, click here to download this free software.

You may reduce the amount of taxes you have to pay by transferring your accumulated income to either your or your spouse’s RRSP.

Ready to invest? Creating an investment plan with Island Savings Insurance Services is simple!

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