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WHO CAN HELP YOU SAVE FOR YOUR CHILDREN’S EDUCATION ?. A PARTNER YOU CAN TRUST. Your Child’s Future. Would you like to ensure that your children or grandchildren have the necessary financial resources to go to university?. Is Education a Priority ?. - PowerPoint PPT PresentationTRANSCRIPT
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A PARTNER YOU CAN TRUST.
WHO CAN HELP YOU SAVE FOR YOUR CHILDREN’S EDUCATION?
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Would you like to ensure that your children or grandchildren have the necessary financial resources to go to university?
Your Child’s Future
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Studies shows that a post-secondary education and training are increasingly important.
In the 2000s: ◦ 65% of new jobs, or almost 2 out of 3, will require a
post-secondary education.
Is Education a Priority?
Source: Statistics Canada
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Choice #1
Choice #2
Choice #3
Tuition /Program Fees $21,450 $31,353 $18,972
Compulsary Fees :
Athletic Fees $0 $237 $246
Health Services Fees $1,011 $342 $468
Other Fees $777 $744 $573
Student Association Fees $408 $336 $384
Books $2,613 $2,613 $2,613
Supplies $360 $360 $360
Total Cost $26,619 $35,985 $23,616
These amounts do not include
lodging fees
In fact, full-time students in Canada paid $14,500 on average to cover a year of post secondary expenses in 2003-2004. That's roughly $58,000 for a four-year program.
Source:CanLearn
The Cost of Post-Secondary Studies First three years of medicine, starting in 2008, dependent single student
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Let your children go into debt to pay for their education Pay or borrow the amounts required while your child is
at university Save now and be able to offer this opportunity to your
child later on.
What Are Your Choices?
The solution?
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The Registered Education Savings Plan, commonly known as the RESP, is the best solution to save for a child’s education.
The Solution
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Anyone can open an RESP:
Whether you’re parents, grandparents, legal guardians, family members or friends, you can open an RESP and offer a gift to a child!
In addition, when you open an RESP, the child will receive a lovely certificate explaining that someone close to them is taking care of their future.
Free Certificate
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◦ To save for your children’s education◦ To take advantage of the Education Savings (CES) Grants◦ To accumulates in a tax sheltered plan◦ To access your contributions◦ To invest in high-performance investments
Why Choose the RESP?
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The RESP is registered with the government of Canada so that the money saved for school can grow tax-free, until the person designated as the RESP beneficiary enrolls in a post-secondary school.
Government Certification
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Components of the RESP
RESP
Contributions Grants Income
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How much can I save? For all RESPs for the same beneficiary:
◦ Per year: No annual plan contribution limit
◦ Lifetime limit for the plan: Maximum contribution plan limit of $50,000
For how long? Contributions can be made up to the plan’s 31st anniversary
◦ Plan duration: 35 years
Contributions
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Once your RESP is opened, you have many investment possibilities: ◦ Guaranteed rate fixed-term investments◦ Mutual funds:
Bonds Canadian equities U.S. and international equities
Our RESPs also include a guarantee for sums invested
Help Your Money Grow
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Components of the RESP
RESP
Contributions
Grants
Income
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Since 1998 (or the year of the child’s birth)
◦ Each child accumulates $400 (prior to 2007) or $500 in grant room per year. Thereafter, regardless of whether or not an RESP is open in the child’s name.
Accumulated Grant Room
1998 2007
$400 / year $500 / year
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Net family income* lower than $37,885
Net family income* between $37,885 and
$75,769
Net family income* over $75,769
Main federal grant• 20% on the first $2,500 contributed (since 2007)• 20% on the first $5,000 if accumulated room
20%
20%
20%
Additional federal grant• on the first $500 contributed only
20%
10%
CLB• Child born after January 1, 2004• Grant not related to contributions
$500 (first year) $100 thereafter
ACG (Alberta only)• Child born in 2005 or later• Grant not related to contributions
$500 (first year) or,
$100 (age 8, 11 and14)
$500 (first year) or,
$100 (age 8, 11 and14)
$500 (first year) or,
$100 (age 8, 11 and14)
QESI (Quebec only)• 10% on the first $2,500
10%
10%
10%
Enhanced QESI (Quebec only)• Applicable on the first $500 of contributions only
10%
5%
Grants
* Family income for
2008 – Income bracket revised
annually
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Components of the RESP
RESP
Contributions
GrantsIncome
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Income
Accumulated income on contributions and on grants: Non-taxable as long as there are no surrenders
◦ Will be taxable to the beneficiary when Educational Assistance Payments (EAP) are made (as income).
If the child doesn’t go to university:◦ Will be taxable to the subscriber when Accumulated Income
Payments (AIP) are made.
Contributions: Surrenders are non-taxable
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Components of the RESP
RESP
Contributions Grants Income
SubscriberParents; Grand-parents
BeneficiaryChild; Grand-child
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Plan Duration
•Maximum contribution period = 31 years•Maximum duration = 35 years
Opening of plan
End of contributions Close of plan
Year 0 31 35COTISATIONS
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Investment in an RESP
- $
10 000 $
20 000 $
30 000 $
40 000 $
50 000 $
60 000 $
70 000 $
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Deposit: $2,000/year
Interest rate: 6%
Taxation rate: 50%*
Non-registered RESP RESP+ CES grant
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MY EDUCATION DIPLOMA
Education Savings Plans
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Offered as an individual or family plan Minimum deposit of $100 Minimum PAC of $25 ($10 per beneficiary for the family
plan) Investment funds available
IA RESPs
MY EDUCATION
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Flexible contributions allowed Eligible to government grants No annual contribution required Access to your capital at all times Tax-free withdrawal of contributions Possibility to change the plan’s beneficiary at any time
My Education
ADVANTAGES
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Offered as an individual plan only Minimum mandatory PAC of $25 per month until
December 31 of the beneficiary’s 17th birthday Minimum lump-sum deposits of $100 Pre-determined investments
IA RESPs
DIPLOMA
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Offer an education bonus of up to 15% of the contributions to the RESP will increase the income paid for education
Eligible to government grants
Access to your capital at all times
Withdrawals of contributions are tax-free
Possibility to change the plan’s beneficiary at any time
Diploma
ADVANTAGES
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0 18
Diploma – Education Bonus
$100 x 216 months (18 years) x 15%
(bonus according to age) = $3,240
$100/month
Years
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IA RESP Loan
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You would like to increase your contributions, but your current budget does not allow it.
Here is a solution that lets you increase the amounts available in your RESP and receive the maximum government grant, while staying within your budget!
RESP LOAN
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RESP Loan
Available for an amount equal to your contract’s current contributions (up to 100%)
No interest or repayment required until the end of the plan◦ However, it can also be repaid at any time
Available for an amount equal to your contract’s current contributions (up to 100%)
No interest or repayment required until the end of the plan◦ However, it can also be repaid at any time
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How it Works
Your contribution: $1,000 $200
Your RESP loan: $1,000 $200
$2,400
By depositing $1,000, you obtain a $2,400 investment for your child’s studies!
RESP GRANT
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How we compare to the Competition
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No annual fees
Financial institutions and fund companies
Annual administration fee (between $25 and $50)
IA’s RESP and the Competition
IA RESPs
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EAP eligibility in the first study session, with proof of registration
EAP determined by the subscriber
Possibility of AIP
Scolarship Plans
EAP eligibility in the second year of studies and at age 19, with proof of school success
EAP determined by the foundation
Accumulated income paid to the foundation
IA’s RESP and the Competition
The advantage of an IA RESP: FLEXIBILITY
DIPLOMA and MY EDUCATION
EAP: Educational Assistance PaymentsAIP: Accumulated Income Payments
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For the 20% (or more) grant For the education bonus of up to 15% (Diploma) For tax-sheltered accumulation To maximize the grant through the RESP loan To diversify your investments (My Education) For the flexibility of changing beneficiaries For the possibility to transfer investment income to your RRSP, if
your child does not pursue a post-secondary education
The Education Savings Plan (RESP)
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THE RESP is the ideal
savings vehicle for
children’s post-secondary education!
THE RESP is the ideal
savings vehicle for
children’s post-secondary education!