Tuition fees, housing, textbooks, personal expenses, etc. Post-secondary education costs can quickly become staggering, not to mention the fact that they vary depending on the program and the province. For undergraduate studies in Quebec, for example, annual tuition fees alone are estimated at $4,310 in 2021-20221. With a Registered Education Savings Plan (RESP), you or a loved one can save for a child's education and avoid the financial stress of student debt, especially if you contribute early. And for grandparents, it's a great way to get involved in a grandchild's future, by giving the gift of savings! Does this plan meet your needs? Here are some answers to the most frequently asked questions:
Any adult can open an RESP to help fund post-secondary education for a child they know, whether they are a parent, grandparent, godparent or even a family friend. Note that the total amount of contributions must not exceed $50,000 per child and is not tax-deductible.
The subscriber, who must be a parent or grandparent, can open an account for several beneficiaries (children). This type of plan has the advantage of allowing grants to be transferred between siblings, for example, if one of the children decides not to pursue post-secondary education.
The subscriber, regardless of family relationship, can only designate one beneficiary.
Canada Education Savings Grant (CESG)
The CESG is available to all Canadian children until the end of the year in which the child turns 17 and is equal to 20% of the first $2,500 contributed annually to an RESP (max. $500/year). The lifetime limit for grants is $7,200. In addition, if you have a modest income, you may be able to receive the Additional CESG, which adds 10-20% on the first $500 or less of contributions made.
Canada Learning Bond (CLB)
A CLB of $500 in the year the account is opened and $100 per year thereafter until the child turns 15 years of age, to a maximum of $2,000, is available for children in families with modest incomes. The CLB does not require any contributions; simply opening an RESP is sufficient to access this bond.
Quebec Education Savings Incentive (QESI)
The QESI is a refundable tax credit paid into an RESP. It is equal to 10% of the annual contributions made (max. $250/year) and the maximum grant is $3,600. In addition, depending on your income, you may be able to receive the additional QESI, which can range from an additional 5% to 10% on the first $500 you contribute each year.
While the earlier the better (preferably when your child is born), it is possible to contribute until your child's 17th birthday. However, if you want to take advantage of the CESG, be aware that special requirements apply when the beneficiary is 16 or 17 years old. Please consult the Canada Revenue Agency website for full details
There are several options available to you. You could:
This plan in no way prevents you from being eligible for loans and bursaries offered by the Quebec government.
As you have seen, the RESP is an advantageous tool to help your children pursue post-secondary education and get a good start in life. In addition, at LBC Financial Services Inc., you have the flexibility to choose your investments from a selection of 7 mutual fund portfolios according to your investor profile and time horizon. Do you have other questions about RESPs? Our advisors are here to answer them for you and to suggest the solution that best suits your situation.
The RESP is offered by LBC Financial Services Inc. ("LBCFS") and Mackenzie Investments is the promoter. As such, only mutual funds from the Laurentian Bank Group of funds are offered in this plan. The mutual funds (Funds) are distributed by LBC Financial Services, Inc. ("LBCFS"), a subsidiary of Laurentian Bank of Canada ("Laurentian Bank"). LBCFS is a separate legal entity from Laurentian Bank, B2B Trustco, and any mutual fund company.
The licensed LBCFS Mutual Fund Representative is also an employee of Laurentian Bank. As such, LBCSF's liability is limited to the actions of its representatives in the course of their duties to LBCFS. The Fund Facts and Simplified Prospectus contain important information. We ask that you read these documents carefully before investing. For more information with regards to the funds traded, please refer to the funds simplified prospectus. Fund Facts can be obtained by contacting an LBCFS representative at any Laurentian Bank branch. Investing in a fund may result in sales and trailing commissions, management fees, administration fees and other fees. The funds available through LBCFS are not insured by the Canada Deposit Insurance Corporation, Canadian securities regulators, or any other public deposit insurer. In addition, mutual funds are not guaranteed in whole or in part by Laurentian Bank, B2B Trustco, or any other fund company. There is no guarantee that a fund will maintain a constant value per unit, or that you will recover the full amount invested in a fund. Funds often fluctuate in value, and past performance is not an indicator of future performance.
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