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The ABC of RESPs

Learn more about what an RESP is, how it works and what makes it a great option for education savings.

Learn about RESPs

RESP Insights

Here are some articles to help you plan your education savings.

What is an RESP?

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How do RESPs work?

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7 Reasons RESPs Are the Right Choice for Education Savings

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5 Tips for Saving for New Canadians

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RESPs: Misconceptions vs Reality

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What's the potential value of my RESP?

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What the employment landscape will look like in 20 years

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What You Need to Know About Taxes and RESPs

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7 things impacting the cost of your child’s post-secondary education

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What if your child doesn't want a post-secondary education?

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6 Ways to Maximize Your Child’s RESP

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Flexible Program Options with an RESP

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How much does the government add to my child’s RESP anyway?

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Saving Up for Post-Secondary Education—What The Statistics are Telling Us

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The Forgotten University Fee On The Rise

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5 Spending Habits You Can Break to Help Save More for Your Child’s Post-Secondary Education

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Common questions

Got questions about RESPs and CST Spark’s Bright Plan?
You may find your answers right here.

About RESPs

What is an RESP?

Registered Education Savings Plans (RESPs) are tax sheltered education savings plans registered by the Canadian government. RESPs are a great opportunity for Canadians to invest in a child’s post-secondary education.

The subscriber (often a parent or grandparent) opens an RESP and contributes funds to the plan that help pay for the future post-secondary education costs of the beneficiary (often a child or grandchild).

What makes RESPs special is that, although the contributions to it are not tax-deductible, the income earned on them is sheltered from tax if it remains in the plan. At the time of withdrawal, the income tax is charged to the beneficiary, but as most beneficiaries have little to no income, they usually end up paying little to no taxes.

Another benefit is that contributions to an RESP can also attract government grants, which increases the amount available to the child.

Who are the three key players in any RESP?

The subscriber, who is typically but not necessarily a parent or grandparent, sets up the RESP account and makes the contributions into the RESP for the beneficiary. A subscriber must be a Canadian resident with a valid SIN (Social Insurance Number). Two people can act jointly as subscribers as long as they are spouses or common law partners. A subscriber can also be a primary caregiver to the child, such as child care departments or organizations that maintain the child who will receive payments.

The beneficiary, who is typically but not necessarily a child or grandchild, receives the educational assistance payments from the RESP account. They will get the contributions and the income earned on those contributions in the form of Education Assistance Payments (EAPs).

The promoter is any person or organization offering RESPs to the public and administering the RESP account. For example, the Canadian Scholarship Trust Foundation is a promoter of RESPs, such as CST Spark.

How does an RESP work?

Set up
A parent or grandparent sets up an RESP account by entering into an RESP contract with the promoter and names one or more children as beneficiaries under the RESP. Once the RESP is set up, the promoter also helps the subscriber apply for government grants.

The subscriber makes regular contributions into the account and the government also deposits applicable grants into the plan. The promoter administers and ensures the amounts paid into the plan are made according to the terms of the plan.

When the child is ready for post-secondary school, the government grants and income earned on the grants and contributions are used to pay for their educational costs. These are made in the form of Education Assistance Payments (EAPs). The contributions, subject to investment risk, are always returned to the subscriber.

If the child doesn’t pursue post-secondary educations, for qualifying subscribers the Accumulated Income Payments (AIPs) can be paid into a Registered Retirement Savings Plan (RRSP). The principal is always returned to the subscriber.

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Contributing to an RESP

What’s the best time to open an RESP?

The earlier you begin preparing for your child’s education, the better the options you can provide them in the future.

Starting an RESP now, even with small contributions, will give you access to additional financial support for your child. Saving smaller amounts right away means you may be able to avoid contributing large sums later on.

What is the maximum contribution for an RESP?

The Income Tax Act allows a subscriber to contribute up to a lifetime maximum of $50,000 for each beneficiary.

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RESPs and government grants

What are government grants?

The main reason RESPs are different from other registered or tax-deferred savings plans, such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs), is because they give your child access to government grants.

The Canadian governments offer incentives to save towards post-secondary education in the form of federal and provincial grants. This includes the basic Canada Education Savings Grant (CESG) to any Canadian resident that opens an RESP. The government of Canada matches 20% of the first $2,500 you contribute to your child’s RESP each year, up to a lifetime maximum of $7,200 per child. That works out to an extra $500 paid directly into your child’s RESP every year. If your family’s income falls below a certain level, your child might qualify for another 10-20% on the first $500 contributed each year to your child’s RESP.

In addition to the CESG, depending on your province, your child may also be eligible for provincial grants. These include:

Quebec Education Savings Incentive (QESI)
The government of Quebec offers the QESI, which is 10% on the first $2,500 contributed annually to an RESP by residents of Quebec, up to a lifetime maximum of $3,600 per child. If your family’s income falls below a certain level, your child might qualify for another 5% – 10% on the first $500 contributed each year to your child’s RESP.

British Columbia Training and Education Savings Grant (BCTESG)
The government of British Columbia offers the BCTESG, a one-time $1,200 grant for BC resident children born on or after January 1st, 2006. You can apply for the BCTESG on your child’s sixth birthday until the day before your child’s ninth birthday.

Saskatchewan Advantage Grant for Education Savings (SAGES)
The government of Saskatchewan offers SAGES, which is 10% of the first $2,500 contributed annually to an RESP by residents of Saskatchewan, up to a lifetime maximum of $4,500 per child. Although this grant has been temporarily suspended, the Saskatchewan Government recommends new plan holders to complete a SAGES application and submit it to their RESP promoter for consideration if SAGES is reinstated.

What do I need to know about applying for government grants?

CST Spark makes it easy for you to access government grants. We simplify the process by applying directly to the federal government and relevant provincial governments at your request. We also have Direct Dealing Representatives who help you manage and optimize this extra source of money.

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Types of RESPs

What is a Family Savings Plan?

A Family Savings Plan is:

  • Used to pay for the post-secondary education of multiple beneficiaries as long as they are siblings and under the age of 21;
  • Suitable for children of any age;
  • Flexible in how much and how often contributions are made;
  • Funds can be shared across siblings when they attend post-secondary education.
What is an Individual Savings Plan?

An Individual Savings Plan is:

  • Opened by anyone and can pay for the post-secondary education of one beneficiary, including yourself;
  • Suitable for children of any age;
  • Flexible in how much and how often contributions are made.
What are the different ways RESP plans are managed?

Your RESP can be either self-directed or managed.

Self-Directed RESPs
In a self-directed RESP, you as the subscriber decide what investments will be made. Typically, you’ll be charged an annual administration fee from the plan provider. You may also be charged commissions fees when buying or selling securities within the Plan.

Managed RESPs
In a Managed RESP account, your contributions will be invested in individual securities or a pool of securities that is professionally managed. You may have to pay sales charges which will be deducted from your contributions. From there you may be charged ongoing management, Deferred Sales Charges (DSC) and plan administration fees.

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How flexible are RESPs?

What happens when I’m ready to take my money out of the RESP?

Once your child enrolls in eligible studies, they can access Education Assistance Payments (EAPs). These are used to pay for post-secondary school expenses like tuition, books and transportation.

EAPs are made up of earnings on your contributions, the government grants your child receives, and the earnings on these government grants. Your contributions will be returned to you as the subscriber.

When your child is enrolled in a qualified post-secondary program, you can determine how much they would like to withdraw from the RESP. That’s when you’ll decide how much of the income to withdraw for your child’s EAPs, and whether you want to withdraw any of your contributions.

What if my child decides not to pursue post-secondary education?

If your child doesn’t enroll in post-secondary studies, you have options. You can:

  • Transfer the plan to another eligible beneficiary;
  • Transfer up to $50,000 of the income to your RRSP, spousal RRSP or RDSP tax-free (if you have sufficient contribution room) if your child is over 21 years and the RESP is 10 years old.
  • Withdraw the income and pay tax on it at your marginal tax rate, plus an additional tax of 20%.

Although any government grants will need to be returned to the government, your contributions, subject to investment risk, will always be returned to you tax free.

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How is CST Spark’s Bright Plan different?

Why choose CST Spark’s Bright Plan as your RESP?

CST Spark makes RESPs simple and accessible to all Canadians, by making your plan:

  • Easy to set up,
  • Tailored to fit your budget and child’s age,
  • Flexible so you can change how much and when you contribute,
  • CST Spark is a subsidiary of the Canadian Scholarship Trust Foundation, which pioneered RESPs in Canada and has over half a century of experience in education savings.
How do I complete a Bright Plan application?

Simply click
Apply Now and follow our easy three-step application process.

After you submit your application online and request an appointment, our Direct Dealing Representative will contact you to review and complete your information. This is to make sure our Bright Plan suits your investment needs. Once your application is accepted, you will have entered into an Education Savings Plan (ESP) Agreement.

The Prospectus and Plan Summary is emailed to you as the subscriber(s) and a copy of the completed application is appended to your online secure web account. You’ll be notified of this via email. The ESP Agreement, Welcome Letter, and Trade confirmation are also posted to your online account.

Contact us: who can I talk to?

You can speak with us over the phone or via live chat Monday to Friday from 9am to 5pm ET. Also, once you submit your Bright Plan application online, you’ll be asked to request a date and time to review the application with one of our Direct Dealing Representatives.

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Once I’ve completed a Bright Plan application

How can I keep track of my account(s) balance?

By logging in to our Secure Portal you’ll have access to of each of your beneficiaries’ account information, including total contributions made to date, current market value and projected RESP savings.

How do I change my profile information?

Simply log in to our Secure Portal and scroll down to the “Your Information” section, where you’ll be able to (by clicking the little pencil in each of the sub-sections) update your contact information, communications preferences and your account’s password

How do I update my banking information?

Simply log in to our Secure Portal and scroll down to the “Your Information” section, where you’ll be able to (by clicking the little pencil in the banking sub-section) update your transit number, account number and financial institution. Please note: If changes to your banking information are made within 5 business days of your next pre-authorized payment date, the funds will be drawn from the original bank account.

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Still have questions?

Contact us by secure message, phone or live chat.

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 1-800-461-7100 or 416-849-5788
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