Our plans fall into a special category of education savings plans. Government regulations limit the type of investments that can be held in the plans to those that are lower risk investments. Your contributions and government grants are invested in lower risk investments that earn a competitive, risk-adjusted return. Income earned in your Plan has more earning potential through investments in a mix of Canadian equities, US and Canadian Exchange Traded Funds (ETFs) and corporate bonds.
We understand that, unlike saving for retirement or paying off a mortgage, you usually have less than 18 years to save for a child’s post-secondary education. Also, the money will be used up in a relatively short time (a maximum of 4 years in most cases). So, it’s much more important that your money be available when you need it.
The closing balance on the statement of account includes the addition of income allocation, your contributions and government grants; and the deductions of sales charges, account maintenance fees and insurance premiums (if applicable).
There is a difference between your closing balance and your total contributions because the closing balance includes the addition of income allocation, your contributions and government grants. It also includes the deduction of sales charges, account maintenance fees and insurance premiums (if applicable).
If you opened your Registered Education Savings Plan recently, the closing balance amount on your statement may indicate zero. You will see on your Statement of Account that the sales charges are currently being deducted from your early contributions. When you join the plan, there is a one-time upfront sales charge of $100 per Unit. With single contribution plans, the fee is deducted from the one-time contribution. With monthly and annual contribution plans, the fees are deducted through your early contributions. Once 50% of your sales charges is paid, half of the remaining contributions will be applied to cover the rest of the sales charges and half will accumulate as net savings, working to maximize your savings and income potential. In addition, your RESP attracts available government grants and earns income on those grants, provided we have the beneficiary’s SIN on file and a completed grant application form.
Collection of sales charges is different from other available RESP products offered by banks, where the Management Expense Ratio (MER) is charged annually for as long as you hold the fund. This MER is not refundable under any circumstances, while the Heritage Plans offer a unique opportunity that i) may provide a refund of all or a portion of the sales charges with the principal for plans opened before July 2, 2004, or with educational assistance payments (EAPs) for plans opened after July 2, 2004 for plans with a maturity date of July 31, 2014 or earlier, or ii) will provide a refund of up to 25%, up to 50% or up to 100% of the sales charges to the subscribers at maturity depending on the payout option selected for plans with a maturity date of July 31, 2015 or later.
If you did not provide your beneficiary’s Social Insurance Number (SIN) at the time of enrollment, your contributions were placed in an unregistered education savings account awaiting the beneficiary’s SIN. If you provided your beneficiary’s SIN in 2017, we transferred the balance of your unregistered education savings account into the new registered account that same year and treated the transfer as a new transaction with the opening balance of zero as per requirements of Employment and Social Development Canada (ESDC).
For an Education Savings Plan to be registered under the Income Tax Act (Canada), a beneficiary must have a valid SIN. If the beneficiary’s SIN is not provided at the time of enrollment, contributions will be deposited in an interest bearing, segregated account held in trust on behalf of the subscriber. While in the unregistered education savings account, contributions are not eligible for the tax benefits of an RESP or government grants. If the SIN is not provided within 24 months, your contributions (less fees) and insurance premiums (if applicable) will be refunded, together with any income earned.
The beneficiary’s SIN must be provided within 24 months of the date of acceptance of the subscriber’s application. As long as the SIN is provided within 24 months, and the completed grant form(s) are received, the Foundation will apply on the subscriber’s behalf for registration of the plan and applicable government grants.
Income allocation in your plan is based on the net balance in your account including any income already earned (after all deductions are made). Income on government grants is calculated on the full amount of grants less the $25 Canada Learning Bond (CLB) Administration Fee (if applicable).
Yes. Income will continue to accrue until your new/revised maturity date.
An AIP may only be transferred into the RRSP of an original subscriber or common-law partner of a deceased original subscriber (if there is no other subscriber) tax-free. If you wish to transfer the funds into your beneficiary’s RRSP, you must withdraw the AIP as a cash payment, which can then be applied into an applicable RRSP (provided there is contribution room available). Please note: An AIP cash withdrawal is subject to two different taxes: the regular income tax and an additional federal tax of 20% (12% federal and 8% provincial for Quebec residents).
Yes, the child (beneficiary) will be responsible to pay regular tax on the EAPs received. Since the income tax bracket is typically very low for students, your beneficiary may not be taxed as much for the amounts received. A T4A slip will be sent in February of the year following the EAP payment enabling the beneficiary to file for the taxes applicable.
Net contributions returned to you, the subscriber, are not included in your taxable income. The EAP payments to the beneficiary are taxable to the beneficiary. Under the self-determined option, if the beneficiary does not pursue post-secondary studies and the subscriber(s) withdraws the income accrued in cash, they will be required to pay the regular tax on the amount received plus an additional federal tax of 20% (12% federal and 8% provincial for Quebec residents).
Yes, your beneficiary may receive EAPs even if he/she studies abroad. There will be an additional tax of up to 25% applicable on each EAP withdrawal if your beneficiary is not a Canadian resident at the time the EAP is paid. To determine if there are any other tax implications, you may want to contact your local accountant or the Canada Revenue Agency (CRA) at 1.800.267.5177.
There are two maturity options under the Heritage Plans:
Under the scholarship option there are three alternatives to select from, with educational assistance payments (EAPs) made in one, two or three years. Your selection will usually depend on the length of post-secondary studies your beneficiary intends to pursue. Alternatively, you may transfer to the self-determined option.
If your beneficiary enrolls in a 2-, 3- or 4-year post-secondary program, the scholarship option is the most beneficial. A combination of programs totaling 2, 3, or 4 years qualifies as well.
Under the scholarship option, your RESP contributions (less applicable fees) are returned to you tax-free at maturity. For plans with a maturity date of July 31, 2014 or earlier, and were enrolled prior to July 2, 2004, the sales charges of 25%, 50% or 100% (depending on the payout option selected), are paid along with your maturity payment. However, if the plan was enrolled on or after July 2, 2004, and based on the payout option selected; the sales charges of 25%, 50% or 100% are returned along with the EAPs. For plans with a maturity date of July 31, 2015 or later, your RESP contributions (less applicable fees) are returned to you tax-free at maturity, along with up to 25%, up to 50% or up to 100% of the sales charges depending on the payout option selected. These funds can be used to finance your beneficiary’s first year of post-secondary education.
Yes. Depending on the length of eligible studies your beneficiary attends, you can decide how the educational assistance payments (EAPs) should be paid to your beneficiary. There are three payout options available:
For plans with a maturity date of July 31, 2014 or earlier:
1. For students attending a 2-year post-secondary program, Option #1 provides 1 EAP that consists of government grants, income1, attrition2 and a payment from the discretionary payment account3.
2. For students attending a 3-year post-secondary program, Option #2 provides 2 annual EAPs, where each payment consists of 50% of government grants, income1, attrition2 and a payment from the discretionary payment account3.
3. For students attending a 4-year post-secondary program, Option #3 provides 3 annual EAPs, where each payment consists of: 33.3% of government grants, income1, attrition2 and a payment from the discretionary payment account3.
For plans with a maturity date of July 31, 2015 or later:
1. For students attending 2 years of eligible studies, Option #1 provides 1 EAP that consists of government grants, income1 and a non-discretionary payment to enhance the EAP4.
2. For students attending 3 years of eligible studies, Option #2 provides 2 annual EAPs, where each payment consists of 50% of government grants, income1 and a non-discretionary payment to enhance the EAP4 with funds paid over two years and distributed with each EAP.
3. For students attending 4 years of eligible studies, Option #3 provides 3 annual EAPs, where each payment consists of: 33.3% of government grants, income1 and a non-discretionary payment to enhance the EAP4 with funds paid over three years and distributed with each EAP.
1. In each year the available Income, including that from terminated plans, is divided by the number of Units of eligible beneficiaries who have selected the same number of EAPs. The result is multiplied by the number of Units held with respect to the particular eligible beneficiary and distributed as part of the EAP. Income on government grants from terminated plans is not included in this amount.
2.Attrition is the term that applies to the share of pooled income that remains in the Heritage Plans after any beneficiaries in the same group as your beneficiary do not qualify for payments. For those beneficiaries, the income earned on contributions less fees stays in the total asset pool to be shared by beneficiaries remaining in the pool. Please refer to the Heritage Plans’ prospectus for more information on how attrition applies to your plan. Actual results may vary.
3. Discretionary payments (consisting of sales charge returns and payments from the discretionary payment account) are not guaranteed. You should not count on receiving a discretionary payment. The Foundation decides if it will make a discretionary payment in any year and how much the payment will be.
4. This is a non-discretionary payment to beneficiaries in a beneficiary group, which represents the amounts of pre- and post-maturity attrition remaining after the refund of up to 25%, up to 50% or up to 100% has been paid. See prospectus for full details.
The self-determined option is designed specifically for beneficiaries enrolled in studies that are shorter than two years in length or not attending at all.
With the self-determined option of the Heritage RESP, you, the subscriber, may withdraw your contributions less fees any time after the maturity date but before the expiry date of the plan, which is the end of the 35th year following the year the plan was entered into (or in the case of a specified plan, the end of the 40th year following the year the plan was entered into).. Then, as long as your beneficiary attends a post-secondary program offered by a recognized institution, he or she is eligible to receive educational assistance payments (EAPs). If the beneficiary does not plan to pursue a post-secondary education, the subscriber may request to release an accumulated income payment (AIP)*.
* Certain conditions apply. See prospectus for full details
Your beneficiary will receive educational assistance payments (EAPs), which are made up of all income accrued on your Heritage Plan contributions less fees, all government grants, where applicable, and the income earned on those grants. EAPs can be applied to any qualifying post-secondary education program costs, including tuition, books, residence, and other legitimate education expenses.
Your RESP funds can be used for either full-time or part-time studies in a qualifying program. A qualifying full-time program in Canada is a course of study of at least three consecutive weeks, with at least 10 hours of study per week. A qualifying full-time program outside of Canada, is a course of study at a university of at least three consecutive weeks, with at least ten hours of study each week; or, a course of study at a Recognized Institution, other than a university, of at least 13 consecutive weeks, with at least ten hours of study each week. A qualifying part-time program in Canada is a minimum of 3 consecutive weeks studying for at least 12 hours per month while outside of Canada is a minimum of 13 consecutive weeks for at least 12 hours per month.
If the beneficiary is registered for at least 3 consecutive weeks and no less than 12 hours per month, the maximum amount that may be released for each 13-week period of study is $2,500. The beneficiary must continue studies to qualify for additional payments.
If the beneficiary is registered for full-time studies, the maximum amount of an EAP that can be made to a student as soon as he/she qualifies to receive them is $5,000. After the student has completed 13 consecutive weeks and is still considered a full-time student, there is no limit on the amount of EAPs that can be paid if the student continues to qualify to receive them. If there is a 12-month period in which the student was not enrolled in a qualifying educational program for 13 consecutive weeks, the $5,000 maximum applies again.
Under the self-determined option, any subsequent EAP withdrawal within the same year will be subject to a processing fee of $10.00 (plus applicable taxes).
Important: Pursuant to the Canada Revenue Agency (CRA) regulations, there is an annual EAP threshold limit of $24,676. If the total EAP is more than this amount, you or your beneficiary will be required to provide Heritage with proof of the beneficiary’s educational expenses that meet or exceed the annual threshold limit in order to receive any remaining balance.
You must select an option if you require funds from your Heritage Plans to pay for post-secondary studies. You have until July 31st of the maturity year to select an option. The deadline cannot be extended. If the beneficiary does not plan to enroll in a post-secondary education program in the year the plan is scheduled to mature, please request to delay the maturity date before July 1st in the year the plan is scheduled to mature. Delays of the original maturity date are permissible up to July 31st prior to the beneficiary’s 21st birthday.
If your beneficiary decides not to pursue a post-secondary education, you may transfer to the Heritage Plans self-determined option and may withdraw your contributions less fees and:
You may also substitute the beneficiary on your Heritage Plans with another beneficiary and keep the contributions less fees in the plan until the new beneficiary decides to pursue post-secondary education or until the plan reaches its 35-year lifetime limit; whichever occurs first.
Yes, a beneficiary can still apply for the EAP at a later date up until January 31st of the following year provided the required documents are forwarded to the Foundation. The Proof of Registration can be submitted at a later date at any time prior to January 31st of the following year.
For Heritage Plans with a maturity date of July 31, 2014 or earlier, part-time registration will not enable the beneficiary to receive educational assistance payments (EAPs) under the scholarship option. For plans with maturity date of July 31, 2015 or later, part-time registration will enable the beneficiary to receive EAPs under the scholarship option. Under the self-determined option, beneficiaries will be eligible for EAPs under part-time studies regardless of maturity date of the plan.
A beneficiary (student) can access up to $2,500 of the income and grants for each 13-week period of study. In Canada, the beneficiary will be required to register in a post-secondary course that lasts at least 3 consecutive weeks and is no less than 12 hours of study per month. Outside of Canada, the beneficiary will be required to register in a post-secondary program that lasts at least 13 consecutive weeks and is no less than 12 hours per month. Official confirmation from the Office of the Registrar will be required to facilitate this payment.
When the EAP notice for your Heritage Plans is sent in spring of any given year, he/she may request to put the EAP on hold until January 31st of the following year. This extension may be requested in writing from the beneficiary by completing the EAP Application in your secure Subscriber Online account, by calling the Customer Service Team toll-free at 1.800.363.7377, or by contacting us via email at CustomerCare@HeritageRESP.com prior to August 15th.
Each condensed program has different criteria for completion, which is regulated by the post-secondary institution where such a program is offered. For example, if a beneficiary (student) is going to take 3 years to complete a 4-year program, there may be an opportunity for the beneficiary to receive all 3 EAPs under the scholarship option. For further details, please call our Customer Service Team by phone toll-free at 1.800.363.7377 or contact us online
Canada Revenue Agency regulations confirm that apprenticeship programs qualify, provided the student is registered in the minimum requirements as stipulated in the Income Tax Act (Canada). You can select from one of the three scholarship options, or you can select the self-determined option. Choose the option best-suited to the length of your beneficiary’s term of study.
The Office of the Registrar is located on the campuses of post-secondary institutions. Through this office, students can register for their courses. The Registrar is also responsible for the record-keeping of all their files and course information.
The beneficiary (student) is required to complete the Personal Information section of the Proof of Registration form, sign, and date the form. The rest of the form must be completed, signed, and stamped/sealed by the Office of the Registrar at the post-secondary institution.
Please note that the proof of registration or verification of enrollment can be mailed, emailed, or faxed.
If the beneficiary (student) realizes that he/she will not be able to submit the Proof of Registration, Verification of Enrollment, or the EAP Application form before the August 15th deadline, he/she must request an extension. This extension is automatically granted up until January 31st of the following year and may be requested in writing from the beneficiary by completing the EAP Application, by calling the Customer Service Team toll-free at 1.800.363.7377, or by contacting us online. Please note the sooner the Foundation receives the EAP Application and the Proof of Registration form or Verification of enrollment, the earlier the EAP will be released (but not before the 2nd week of September).
For Heritage Plans with a maturity date of July 31, 2014 or earlier, if the beneficiary is eligible to apply for an EAP however he/she has not completed the previous academic level successfully, he/she may request to defer the first EAP for a maximum of two years after the maturity date, one year at a time, to the beginning of the next EAP season. Further deferrals may be granted by the Heritage Educational Foundation at its discretion. If the first EAP has already been released and the beneficiary is eligible to apply for the second or third EAP, a deferral may be granted for a maximum of one year, to the beginning of the next EAP season. Further deferrals may be granted by the Foundation at its discretion.
For plans with a maturity date of July 31, 2015 or later, if the beneficiary is eligible to apply for an EAP, however he/she has not completed the previous academic level successfully, he/she can still apply for the EAP provided they are registered in eligible studies.
For Heritage Plans with a maturity date of July 31, 2014 or earlier, if the beneficiary is eligible to apply for an EAP however he/she has not completed the previous academic level successfully, he/she may request to defer the first EAP for a maximum of two years after the maturity date, one year at a time, to the beginning of the next EAP season. Further deferrals may be granted by the Heritage Educational Foundation at its discretion. If the first EAP has already been released and the beneficiary is eligible to apply for the second or third EAP, a deferral may be granted for a maximum of one year, to the beginning of the next EAP season. Further deferrals may be granted by the Foundation at its discretion.
For plans with a maturity date of July 31, 2015 or later, if the beneficiary is eligible to apply for an educational assistance payment (EAP), however has not completed the previous academic level successfully, he/she can still apply for the EAP provided they are registered in eligible studies.
Alternatively, the beneficiary may also request to have the EAP held until January of the following year. The deadline to apply for the EAP on hold is January 31st.
The maturity date can be delayed one year at a time up to July 31st prior to the beneficiary’s 21st birthday. This option can be selected on the maturity application under question 2, or by completing the maturity application online. Alternatively, subscribers may also request to delay the maturity date by sending a signed letter before the July 1st deadline.
Yes, you can. The following conditions must be met:
If the Heritage Plans self-determined option has been selected:
The Heritage Education Optional Insurance, underwritten by Sun Life Assurance Company of Canada, is available to protect the subscriber in the event that the subscriber suffers a disability or becomes deceased while still in the contribution period of the Heritage RESP.
If a subscriber becomes deceased before the maturity date of the ESP Contract (a Contract made between an individual (or an individual and the spouse of the individual) and the Foundation under which the Foundation agrees to issue EAPs), upon approval of the life claim, the insurance company will pay the life insurance benefit to the Foundation, to be used by the Foundation to satisfy the applicable contributions according to the terms of the ESP Contract.
If a subscriber becomes disabled before the maturity date of the ESP Contract, the insurance company will pay the disability insurance benefit to the Foundation after a 9-month qualifying period. Upon approval of claim, the insurance company will make the applicable monthly contributions according to the terms of the ESP Contract.
Qualifying period means 9 consecutive months beginning on the date the subscriber becomes disabled and ending on the date the subscriber qualifies for benefits.
Without the Heritage Education Optional Insurance coverage, the remaining subscriber (in the case of joint subscribers) or heirs of the subscriber will be required to continue with the contributions, if applicable, in order for the plan to remain in good standing.
You are qualified for insurance coverage if you have an ESP Contract (a Contract made between an individual (or an individual and the spouse of the individual) and the Foundation under which the Foundation agrees to issue EAPs) with the Foundation as a plan subscriber or joint subscriber and you are under the age of 65 on the date of application for insurance coverage. Please note that this coverage has a pre-existing condition limitation. For more information on this limitation and for other important information regarding this coverage, please speak with your Heritage Dealing Representative.
If there are joint subscribers to an ESP Contract, the first deceased or disabled subscriber will be deemed the insured person under the policy.
Insurance premiums are set out in your prospectus. If you have insurance on your plan, the premium is included in your monthly or annual contribution amount however it will not attract any of the government grants.
Please contact us toll free at 1 800 363-7377 or email us at customercare@heritageresp.com. One of our Customer Service Representatives will be glad to guide you through the steps of purchasing insurance.
Upon receipt of your termination request that is signed by the subscriber (if the plan is jointly held, both subscribers must sign the request), the insurance premiums will be refunded only if the insurance purchase date at the time of cancellation falls within 60 days from the later of: