Account opening process
Clients can follow the standard Account Opening Process and select the RESP account type at the start.
CI Direct Investing typically recommends that RESPs be opened jointly wherever applicable. In this case, we will need the secondary account holder also sign up as your client on PPI Valet and submit a separate RESP application through their CI Direct Investing profile. Please note that this will be mandatory to facilitate the transfer of an existing Joint RESP to CI Direct Investing.
Once the client has applied online for the RESP account, we will reach out to you for the following information before sending the account application documents.
- Full name of the account holder(s)
- Full name(s), DOB, and gender for all beneficiaries on the plan
- Confirm if the account is going to be opened as a sole or joint RESP
- Determine the primary account holder for the joint RESP.
- Note: The child must have a valid SIN to be included in an RESP.
Once this is received, the forms will be sent to your client(s) for e-signing. You will be included on all correspondence in this process and any account transfers requested.
Frequently Asked Questions
Does CI Direct Investing open Family or Individual RESPs?
- We open all of our RESP plans as Family plans by default.
- This approach decreases paperwork for clients when there are additional beneficiaries and provides greater flexibility in distributing funds between beneficiaries (excluding funds from government grants).
- Note that an individual plan must be used if the beneficiary is not related by blood or adoption.
Why do we recommend RESPs be opened jointly?
- Having both parents joint on the account means that either client can make contributions, provide instructions for future withdrawals when the children are in post-secondary; and most importantly, both clients will have a right of survivorship in the event that one of them passes away while the account is open.
- This is also a requirement if the client wishes to transfer from a Joint RESP plan at an external institution.
- To do this, the secondary account holder needs to sign up as your client on PPI Valet and submit a separate RESP application through their CI Direct Investing profile. Both clients will need to sign the Joint RESP application.
Can the client's partner make contributions to the RESP?
- Their partner can only make contributions if they are a joint subscriber on the account.
How does the joint subscriber make contributions to the account?
- The primary subscriber will be able to do deposits from the bank account set up on file through the Transfer Funds option on CI Direct Investing.
- The Secondary subscriber can also contribute via bill payment through their online banking. To do this, register the payee as "CI Investment Services Inc." and use the CI Direct Investing nine-digit account number when registering (a zero will need to be added as the 10th digit).
What banking information is used?
- The banking information of the primary account holder will be used unless specified otherwise
Can the joint subscriber see the account?
- Yes, but the clients will need to link their CI Direct Investing accounts.
- You can find more information on this in the article, How can my clients view each other's accounts?
Who applies for grants?
- We will include the respective grant and bond forms in the RESP application package sent to the client(s). Our Custodian will request the grants and bonds on behalf of the client.
- In the event of material changes to the beneficiary info (e.g. there is a new beneficiary on the account or the child turns six in BC and becomes eligible for the BCTESG), the client will need to notify us so we can provide the correct forms.
How long does it take for grants and bonds to be deposited?
- The client will typically receive the grants or bonds in their account within 6-8 weeks of the qualifying deposit.
Where can I see the contribution and the grant distribution?
- Currently, the contributions can be seen in the client's account history on their CI Direct Investing account.
- If you would like further details, you can send us a message at [email protected] and we will pass along this information.
Can a party outside of the client's household contribute to the plan?
- Third parties cannot directly contribute to the RESP.
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Options:
- Gift the money to the subscriber who can make the deposit directly to the RESP.
- Open a separate RESP for the beneficiary. Note that you will need to keep track of total contributions to maximize aggregate grants for the beneficiary in this case.
How does a client withdraw funds?
- The account holder will submit a withdrawal through their CI Direct Investing account and we will then follow up with you to get proof of enrolment and complete a redemption form.
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There are two types of withdrawals that the client can make.
- Educational Assistance Payment (EAP) - this is comprised of the growth of principle, growth on top of government grants, and the grants themselves. The student will report this as income. A full-time student is limited to withdrawing $5000 during the first 13 consecutive weeks. After that point, there is no limit.
- Post-Secondary Education Capital withdrawal (PSE) - this is just the portion of principle contributed by the account holder(s). This is received tax-free and there is no withdrawal restriction.
How does a client add beneficiaries?
- You can forward the beneficiary details to [email protected] and our team will prepare new forms for the client(s) to sign.
- Note that the new beneficiary must have an active SIN before we can add them to the account.
Can I change the allocation of contributions?
- We set up the client's allocations to an equal split between all beneficiaries on the plan but these can be changed at any point by contacting our team.
Government grants
RESP contributions are viewed on a calendar year basis. The maximum personal contribution to attract the maximum grant would be a contribution of $2500. The government will match this amount by 20%. The maximum government grant is $500 (20% of $2500 = $500). This is per child.
You are also able to catch up on past years grants one year at a time. For example, if you had not made a contribution in 2017 you would be able to make a $5000 contribution in 2018. This would attract a $500 grant for 2017 and a $500 grant for 2018. Again, this is per child.
The lifetime limit for the government grants is $7200 per beneficiary. Additional grants could be available depending on the family income for the year. If the family’s income is less than $45,916 they will receive an additional 20% (40% total) on the first $500 they contribute. If the family's income is more than $45,916 and less than $91,831 they will receive an additional 10% (30% total) on the first $500 they contribute. For more information please click here.
Low-income families could qualify for the Canada Learning Bond as well. For more information please click here.
Timeline
The government grants will appear in the client's account towards the end of the following month. Say the client made a deposit to their RESP January 10th, the government's contribution should be received near the end of February.
Lifetime contributions
The maximum lifetime contribution per beneficiary is $50,000. There is no annual contribution limit so this could be done all at once. However, the beneficiary will only receive grants for the year the contribution was made.
We recommend having a conversation with a Financial Advisor to discuss the pros and cons of regular or lump sum RESP contributions.
Additional provincial education savings programs
Saskatchewan Advantage Grant for Education Savings (SAGES) was introduced in Saskatchewan in 2013. SAGES will provide a matching grant of 10% of eligible contributions up to $250 per year or $4,500 lifetime per beneficiary. More information can be found here.
British Columbia Training and Education Savings Grant (BCTESG) was introduced in British Columbia in 2015. Eligible RESP beneficiaries will receive a one-time grant of $1,200. More information can be found here.
Requirements for beneficiaries 16 and 17 years old
RESPs for beneficiaries 16 and 17 years of age can only receive the government grants if at least one of the following two conditions is met:
- A minimum of $2,000 was contributed to (and not withdrawn from) the RESP before the end of the calendar year they turned 15 or
- A minimum annual contribution of $100 was made to (and not withdrawn from) the RESP in at least four of the years before the end of the calendar year the beneficiary turned 15.
Options if the beneficiary does not attend post-secondary education
Leave the account open
RESP accounts can remain open for 36 years in case the beneficiary decides to enrol at a later time.
Name an alternate beneficiary
You can name an alternate beneficiary to receive the RESP income. In a family plan, the new beneficiary must be related by blood or adoption to the contributor. In this case, the grants can be allocated to another beneficiary as long as the total grants do not exceed $7,200. Otherwise, any excess grants must be repaid. In an individual plan, the new beneficiary can be anyone. But if the new beneficiary is not a sibling and under 21, the CESG must be repaid.
Contribute to a registered retirement account
As the contributor, the client can defer the tax payable on the income withdrawal by rolling it directly into your RRSP or spousal RRSP, provided they have the contribution room. The maximum rollover is $50,000 per contributor, so a husband and wife who are account holders of a Joint RESP can each roll over up to $50,000 to their RRSPs.
Withdrawal funds
Contributions made to the plan can be withdrawn at any time on a tax-free basis. However, any grants paid on these contributions will be repaid to the government.
In addition to the tax-free contributions that can be withdrawn from the RESP (from the option described above), the client may also be entitled to withdraw the earnings and growth on the contributions plus the earnings and growth on the grants (the grants themselves are repaid to the government) if they meet certain conditions. This is known as an Accumulated Income Payment (AIP). They will qualify for an AIP if all current and previously named beneficiaries have reached the age of 21, are not attending a post-secondary institution and the RESP has been in existence for at least 10 years. An AIP is taxable at the client’s marginal tax rate plus a 20% penalty tax.
If you have any questions, please contact your regional representative or [email protected].