Questions And Answers

An Education Tomorrow Starts With The Right Questions Today.

How does a group RESP work?
Is my principal ever at risk?
What happens if my child does not pursue post-secondary studies?
Who can start a Canadian Scholarship Trust Plan?
What are the tax advantages?
How is the money invested?
How much money can I contribute?
Does the plan require a lot of time to manage?
How do I apply for the CESG
Is it necessary to begin post-secondary education immediately after high school?
How will I get information on how my plan is performing?

How Does A Group RESP Work?

RESP contributions are pooled together in order to earn a higher return on investments than would be possible on an individual basis. Investment income accumulates tax-free within the plan and when your child is ready to pursue a post-secondary education, the principal is returned to you tax-free. Your child receives the investment income from the plan as Education Assistance Payments.

Is My Principal Ever At Risk?

No. Your principal is protected and returned to you.

What Happens If My Child Does Not Pursue Post-Secondary Studies?

You have several options.

1. You may transfer the plan to another eligible beneficiary.
2. If the child is over the age of 21 and the plan has been open for over 9 years, you may transfer up to $50,000 of interest to your RRSP or spousal RRSP tax-free, provided you have sufficient contribution room. Any government grants will need to be returned to the government.
3. You may simply withdraw the interest as income and pay tax on it at your marginal rate, plus an additional tax of 20%. Same conditions as above.
4. Your principal will always be returned to you tax-free.

Who Can Start A Canadian Scholarship Trust Plan?

Parents, grandparents, relatives and friends may start an RESP for a child.

What Are The Tax Advantages?

There are three distinct advantages:

First:
The investment income earned on your principal grows tax-free within the plan.

Second:
The government grants also earn tax-sheltered interest within the plan.

Third:
Payments from the plan are taxable in the student's name, not the contributor's. Since students tend to have a lower annual income than the contributor, little or no tax is payable.

How Is The Money Invested?

• With the Group Savings Plan, funds are primarily invested in government and corporate bonds.
• With the Individual and Family Savings Plans, funds are primarily invested in short-term bonds and money market.

How Much Money Can I Contribute?

Canadian Scholarship Trust Plans are designed to suit all budgets. With the Group Savings Plan, you can start a plan for as little as $9.50 a month for a child under one year of age, or take full advantage of the Federal Government's RESP contribution limit of $50,000 per child over the life of the plan.

With the Individual or Family plan, you can open a plan with a minimum of a $150 initial contribution to a maximum of $50,000 per child over the life of the plan.

Does The Plan Require A Lot Of Time To Manage?

No time at all! You only have to make the one-time decision to start a plan, and we'll do the rest. We manage your funds for you and send you an annual statement of your account. We can even arrange automatic contributions from your bank account so that you never have to worry about it.

How Do I Apply For The CESG?

We will apply for all grants on your behalf once we receive your child's Social Insurance Number and your completed CESG application form. As your RESP administrator, we will receive, manage and track your CESG and earned interest. Account balances will be reported to you with your annual statement of account.

Is It Necessary To Begin Post-Secondary Education Immediately After High School?

No. If your child wishes to postpone starting post-secondary education for a year or so, simply notify the Canadian Scholarship Trust Foundation in writing and the necessary adjustments will be made. The time limit for collecting all EAPs is the year in which the beneficiary turns 26, or before the 26th year of the plan, whichever comes first.

How Will I Get Information On How My Plan Is Performing?

You can get real-time updates on your account at any time by registering on our secure Web site.