How are the kids in your life going to pay for their education?
The average cost of University tuition in Canada is $6,580 per year in 2020-21. That’s over $26,000 for a four-year program. It tripled in the last 20 years and it's expected to triple again in the next 20. Here’s a handy calculator.
What does that mean? If you have a newborn now, their education could cost $60,000 by the time they’re ready for Post-Secondary. If you want your kids to go to school like you did, how will you pay for it? The Capital Group Registered Education Savings Plan can help.
Read all you need to? Apply here to get started!
To apply, click here. If you’re part of the Capital Group RRSP, you’ll currently need a separate email address for your RESP (we expect to have that resolved by summer). You’ll use the following codes to apply:
Capital Group Access ID: CEPC_RESP
To get started, click on Plan members and then sign in with the access code below that best matches your group. Once you have signed in with the guest access code, click the Open an RESP button to get the application process started.
From there, the site will take you through the enrolment process!
See below for more details on how the Capital Group RESP works.
The Capital Group RESP helps you save – and access government grants – to provide for Post-Secondary education costs.
How does it work?
Unlike an RRSP, you don't get to deduct the contributions that you make from your taxes. But your investments grow tax sheltered -- so you don't pay tax on the interest while it's in the plan. When it comes time to take it out, it's taken out in the student's name, so they'll likely pay little to no tax on it.
The most compelling part of the Capital Group RESP, though, is the Canada Education Savings Grant. With this, the Federal Government will match 20% of your contribution, with an annual contribution limit of $2,500. If you've contributed less than your maximum ($50,000), then you can get grants on contributions up to $5,000 per year. The net result: you could get up to $7,200 in free grants from the Federal Government (the maximum allowed).
Total grant dollars available:
Lifetime contributions eligible for grant money: $36,000
Canada Education Savings Grants maximum: $7,200
Annual Contribution examples:
If the yearly contribution is $500, then the government grant portion would be $100 (20%), giving you a total contribution of $600.
Or if your contribution is $1,000, the Canada Education Savings Grant would be $200, bringing the RESP yearly total to $1,200.
On the upper limit, if your contribution is $2,500 for the year, the grant portion would be $500 with a total of $3,000 in the RESP for the year.
It’s a simple online process to get started, run by the same Pension Fund Administrator as the Capital Group RRSP and Group TFSA. Once it’s set up, you can contribute to your plan any time through Online Contributions. The program takes care of all government grants, so you don’t have to worry about that either.
Ready to get started? Start here to begin your application.
Can a child have more than one RESP?
Yes, just like an RRSP or TFSA, you have have more than one. So parents and grandparents, for example, could each start an RESP in the child’s name. The government grants, though, are done per beneficiary (the child) – so they wouldn’t be able to double the grants doing this, and the same maximum ($50,000) applies.
What if I want to set something up for my niece / nephew / best friend’s kid?
That’s an option – you’ll just want to communicate with their parents to make sure that the combined total doesn’t go over the maximums (see above).
What if I already have a Capital Group RRSP? Do I need to create a new account?
Yes, the RESP program is treated separately from the RRSP program, so you’ll need to create a new login specifically for the RESP.
Can I do this through my payroll department?
Unfortunately, as a new program, this isn’t an option yet, but we are working on this becoming an option with payroll departments once it becomes available. In the meantime you can contribute regular or lump-sum payments through online banking, or set up Pre-Authorized Contributions to automatically come out of your bank account each month.
Can I transfer in my existing RESPs to this program?
Not yet! Much like payroll deduction, this is a feature we hope to have in place sometime in the coming year – and we’ll be sure to let those who sign up know when it becomes available.
What if my kids don’t go to Post-Secondary?
If they don’t go to Post-Secondary at all, then you’re able to take out the money contributed to the RESP (tax free) and the growth (this part will be taxable income, as it would be if the child took it out for school). If you have RRSP contribution room, you can also roll it over to your RRSP tax-free. However, you will have to repay the government grants.
What if we’re sure that only one of the kids is going to Post-Secondary?
You can transfer the amounts from one RESP to another.
What if the kids take a “gap year”?
RESPs can be used up to 35 years from the date they were first created, so they have some time to figure out what they want to do with their lives before going to Post-Secondary.
Sources: Tuition fee cost
Do you have one spouse (or common-law partner) with a pension, and one without? You may want to consider a Spousal RRSP!
Capital Group Registered Retirement Income Fund (RRIF)
When retirement hits and it's time to start drawing an income from your RRSPs, how do you do that?