Commonly Asked RESP Questions
1. What is a Registered Education Savings Plan (RESP)?
2. What is the Heritage Educational Foundation?
3. Who is Heritage Education Funds?
4. How much can I contribute?
5. What are the Government Education Savings Incentives?
6. What are Heritage Plan RESPs and how do they work?
7. If my child does not continue his or her education, do I get my contributions back?
8. What about the interest that accumulates on my contributions? That’s lost if my child doesn’t go to school, right?
9. Are there any income tax benefits?
10. Are my contributions at risk?
11. If my financial situation changes, can I make changes to my Plan?
12. What if my spouse or I pass away or become disabled before all of the contributions are made?
13. What fees or expenses must I pay for these Plans?
14. Who can enroll a child in a Plan?
15. What are the most compelling reasons to start a Plan?
An RESP is an Education Savings Plan registered under Canada’s Income Tax Act, which is established for the purpose of providing financial assistance to a Beneficiary (usually a child) when he or she pursues a post-secondary education. Investment earnings on savings within an RESP are tax-sheltered until the child is ready for post-secondary education. The earnings are taxed in the hands of the student, who typically pays little to no tax. In addition, RESPs may qualify for various government incentives that help parents, relatives and friends save for a child's post-secondary education. For more information on these incentives, please see question 5. Subscribers and Beneficiaries enrolled in an RESP must have a valid Social Insurance Number. Beneficiaries must reside in Canada each time a contribution is made to an RESP.
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The Heritage Educational Foundation is a non-profit corporation with over $1.52 billion in assets under management, created for the unique purpose of encouraging and promoting the advancement of post-secondary education through the provision of Educational Assistance Payments (EAPs) resulting from its Subscribers’ contributions to RESPs. The Foundation also sponsors additional programs including the Heritage National Excellence Awards for Teachers (NEAT) in Early Childhood Education and the Heritage Post-Graduate Awards.
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Heritage Education Funds is one of Canada’s leading RESP providers. Established in 1965, Heritage Education Funds continues to help hundreds of thousands of families save for their children’s post-secondary education. To date we have helped more than 500,000 Canadians save for the post-secondary educations of their children and grandchildren.
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There is no annual limit on the RESP contributions. The lifetime limit is $50,000 per eligible child. Depending on the amount of time before your child begins post-secondary education, you could open a plan for less than $5 per month†. The child/Beneficiary must reside in Canada each time a contribution is made.
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Canada Education Savings Grant† (CESG)
Basic CESG: The Canadian Government tops up your annual RESP contributions by 20%, up to $500 per year, per eligible child.
Additional CESG: Qualifying families may receive up to 40% on the first $500 of annual RESP contributions. Both Basic and Additional CESG have a combined total lifetime maximum of $7,200 per eligible child.
Canada Learning Bond† (CLB): For qualifying families who open an RESP, an initial CLB of $500 from the Canadian government is available to help you save for your child’s post-secondary education and will be deposited into the child’s RESP. Subsequent installments of $100 will be available for children for each year of eligibility until age 15.
Alberta Centennial Education Savings Plan†* (ACES): Qualifying children born to or adopted by Alberta residents are entitled to a one-time initial grant of $500 to a child’s RESP. Subsequent grants of $100 may be available to Alberta children at age 8, 11 and 14. A matching contribution of $100 into the RESP is required in the year prior to applying for the grant.
Quebec Education Savings Incentive** (QESI): The Government of Quebec introduced the Quebec Education Savings Incentive (QESI) to further encourage Quebec families to save for their children’s post-secondary education. This incentive is paid in the form of a refundable tax credit by Revenue Quebec the Registered Education Savings Plan (RESP) of the Beneficiary. The Beneficiary must be a resident of Quebec. The QESI is comprised of a basic and an increased credit and is subject to a lifetime maximum of $3,600 per Beneficiary.
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Heritage Plan RESPs were established for the purpose of helping parents save towards the ever-increasing cost of a post-secondary education.
Heritage Education Funds, Inc. distributes the Heritage Plan RESPs. Heritage Plan RESPs are time-defined, goal directed savings programs for parents (or grandparents and other relatives or friends) who contribute on behalf of children who are under 15 years of age at the time of enrollment.
Subscribers save towards the first year of post-secondary education and the Heritage Educational Foundation provides Educational Assistance Payments (EAPs) toward any of the second, third or fourth years for qualified students. You can alternatively select a Self-Determined Option that is best suited for students attending a program that is less than 2 years. It’s that simple!
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Absolutely! Your savings are always yours (less applicable fees as shown in our prospectus), and will be returned at maturity, which is typically age 18.
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Not so! With Heritage Plan RESPs the built-in Self-Determined Option enables you to withdraw your interest earned, in the form of Accumulated Income Payments (AIPs) along with your savings (less membership fees, depository fees and if applicable, insurance premiums), to be paid out in whole or in part at any time, up to 35 years after enrollment†.
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Yes. Educational Assistance Payments (EAPs) are taxable in the hands of the student, whose tax liability is typically low or non-existent due to the low income and high exemption status of most students.
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Contributions and interest earned are invested in various lower-risk securities like Guaranteed Investment Certificates, Federal and Provincial Bonds, Corporate Debt Securities, Term Deposits, Government Treasury Bills, and Mortgage-backed Securities that earn a consistent and competitive return.
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Yes. You can increase or decrease the contribution amount when your needs change. We encourage Subscribers to contribute only what they can comfortably afford. The only limit is the Canadian government lifetime maximum of $50,000 in contributions per eligible child. Maximizing your savings not only helps to maximize the future Educational Assistance Payments (EAPs) but also the Canada Education Savings Grant (CESG) paid into your child's RESP each year, all of which can benefit from the power of compound interest.
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The Heritage Educational Foundation offers an optional protection benefit† on the Heritage Plan RESPs for eligible contributors which ensures that in the event of death or total disability (for a minimum of 9 consecutive months), your future contributions will be made on your behalf, securing your child’s RESP and the most affordable and important gift you can give your child … a post-secondary education.
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For the Heritage Plan RESPs, fees paid by the Subscriber are listed below:
- A $100 per unit membership fee deducted from early contributions, all or part of which may be returned with the Educational Assistance Payments (EAPs), depending on the Scholarship Option chosen. Membership fees are not refundable if you cancel your Plan prior to maturity.
- An annual depository charge between $3.50 and $10.00 plus GST. The amount of this fee depends on how you contribute to the RESP and is deducted from savings.
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Any person of legal age (18 or older) who wishes to help provide for a child’s future post-secondary education and who has a Social Insurance Number, may enroll a child in a Plan.
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- You can rest easy knowing that when it comes time to pay for a post-secondary education for your child, you’ll be in a better position to afford it.
- You will benefit from the power of compound interest working for you and your child immediately.
- Your child’s Plan will benefit from the Canada Education Savings Grant and may benefit from other government education savings incentives that you may qualify for, providing your child resides in Canada and has a valid Social Insurance Number.
- With the Heritage Plan RESP, contribution protection for eligible contributors commences as soon as you enroll in the optional insurance coverage†.
Are you ready to start an RESP?
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†Certain conditions apply. See Prospectus for full details.
* For Alberta residents only.
** For Quebec residents only.
Heritage Education Funds RESPs are offered by Prospectus only.
Heritage Education Funds is the trade name of Heritage Education Funds, Inc.