Basics
Term for the student the RESP is intended for?
Beneficiary
What is the Lifetime Contribution Limit for each beneficiary
$50,000
CESG
Canada Education Savings Grant
20% government matching of contributions to a maximum of $500 per beneficiary per year
What happens to the grants if the beneficiary doesn't go to school
They are paid back to the government
T or F withdrawal of contributions is not taxable
True
Term for person who owns the RESP
A subscriber
Who can contribute to the RESP?
Anyone
What is the Additional Grant?
for low income households:
Additional 20% on first $500 contributed = $100
Plus, the 20% basic grant up to $500 = $600
Lifetime limit of $7,200 in grants still applies, they just reach it faster with the additional grant.
PSE
Post-Secondary Education payment
tax free - made up of contributions
Who pays tax on EAP withdrawals?
The Beneficiary
They should be in a low enough tax bracket to not actually pay
This type of RESP plan can more than one beneficiary
Family plan
beneficaries must be related by blood or adoption
Annual contribution amount to maximize grants
$2,500 x 20% = $500 maximum grant each year per beneficiary
BCTESG
Provincial grant
BC Training and Education Savings Grant
one time $1,200 eligible to all beneficiaries between the ages of 6-9
EAP
Education Assistance Payment
Grants and income
Who pays tax on AIP withdrawals?
The Subscriber
If the beneficiary doesn't go to school, the accumulated income may be withdrawn and taxed at the subscriber's marginal tax rate Plus a 20% penalty tax for allowing the income to grow tax free.
Up to $50,000 can be moved into an RSP to avoid the penalty, IF they have the contribution room. There would be no tax deduction.
What is the number of years the plan can be open?
35 years
What is the lifetime maximum grant a beneficiary can receive
$7,200
CLB
Canada Learning Bond
$500 initial deposit then $100 per year until child is 15 years old. Maximum $2,000 each eligible beneficiary
AIP
Accumulated Income Payment
Withdrawal of income if beneficiary does not go to school
T or F Contributions are Tax Deductible
False