Understanding your plan’s maturity
Typically, your plan’s maturity date is on July 31st of the year your beneficiary turns 18 years old and is expected to start their first year of post-secondary studies. Depending on your document delivery preference of important updates, an information notice will be sent to you within 180 days prior to your maturity date, but not later than July 1st. This notice will invite you to login to your Subscriber Online account to guide and instruct you on the steps of the maturity process and the forms to be completed by you and your beneficiary.
Before your maturity date, you must select an option that best suits your beneficiary’s academic studies. There are 2 options available: the scholarship option and the self-determined option.
The Scholarship Option
This option is ideal for students taking 2, 3 or 4 years of eligible studies. Your contributions less fees, also known as your “principal," along with up to 25%, up to 50% or up to 100% of the sales charges (depending on the scholarship option chosen) will be returned to you on or after your maturity date and can be used to help fund your beneficiary’s first year of post-secondary studies. Educational assistance payments (EAPs) are available in the 2nd, 3rd and 4th years of eligible studies depending on the scholarship option (option 1, 2 or 3) you chose prior to the release of your contributions less fees. EAPs are paid beginning the 2nd year of eligible studies.
The Self-Determined Option
This option is ideal for students enrolled in eligible studies that are less than 2 years in length, or not attending at all. You may request your contributions less fees at any time between the maturity date and your plan’s expiry date of 35 years from the application date. The sales charges are not returned under the self-determined option.
If your beneficiary enrolls in a qualifying program – your beneficiary can request EAP(s) at any time up to your plan’s expiry date.
If your beneficiary does not enroll in a qualifying program – you can request the earnings in your plan in the form of an accumulated income payment (AIP) provided you meet certain criteria.
Educational Assistance Payments (EAPs)
An educational assistance payment (EAP) is the payment your child receives from their RESP when they enroll in an approved post-secondary institution. The beneficiary will receive EAPs once a year in their 2nd, 3rd and 4th year of eligible studies, depending on the option selected and provided he or she remains eligible. This payment consists of investment earnings and government grant money accumulated in their RESP.
Under both the Scholarship Option and the Self-Determined Option, EAPs consist of the following:
• Income on principal,
• Government grants, and
• Income on government grants.
Additionally, under the scholarship option, EAPs may also consist of a non-discretionary payment to enhance the EAP1.
Please note that a non-discretionary payment to enhance the EAP1 is not available under the self-determined option.
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.
Important information for clients not pursuing post-secondary education:
- You can substitute the beneficiary of your plan as long as no EAPs have been paid and provided certain conditions are met.
- Under the self-determined option, you can request the return of your contributions less fees and you can request your accumulated income payment (AIP) to be paid to you or to the joint subscriber (if applicable) subject to the following 2 different taxes:
- your regular income tax, and
- an additional federal tax of 20% (or 12% federal and 8% provincial tax for residents of Quebec).
To avoid incurring any taxes, you can transfer up to $50,000 of income to your or your spouse’s* RRSP, providing there is RRSP contribution room to do so and you satisfy all AIP requirements.
What is the criteria to request the earnings as an Accumulated Income Payment (AIP) +
- The payment is made to the subscriber of the RESP who is a resident in Canada;
- The payment is made to only one subscriber of the RESP (in the case of a plan with joint-subscribers); and
- Any one of the following three conditions apply:
- The plan has been opened for ten years and each individual who is or was a beneficiary is over 21 years of age and not eligible for an EAP; or
- The plan is being closed by the end of the 35th year (40th year in the case of a specified plan) after the year the plan was opened; or
- All beneficiaries named under the RESP are deceased.
Ready to fill out your maturity application?
Click below to access your online account and complete the digital form:
1 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% and up to 100% of the sales charges has been paid. See prospectus for full details.
*Your spouse must be named as the joint subscriber to your RESP.