At CST, we firmly believe that knowledge empowers you to make the best financial decisions for you and your child. Learning about a new product can come with some questions. We have anticipated some of the questions you might have, and have provided some answers and direction to help you understand how RESPs work and your child’s study options.
Q: What is the minimum amount that I need to open an RESP from CST?
A: The minimum amount you need to invest in a Group Savings Plan 2001 RESP from CST is the greater of $9.50 per month or 1/10th of a unit. This low contribution level is one of the key advantages of our Group Savings Plan. If you enroll in a Family Savings Plan or Individual Savings Plan the minimum initial contribution is $150. If your child is receiving the Canada Learning Bond, the minimum initial contribution for the Family Savings Plan and Individual Savings Plan will be waived.
Q: Who can open a Canadian Scholarship Trust Plan for a child?
A: Anyone! Parents, grandparents, other relatives, even a friend of the family.
Q: What are the tax advantages of an RESP?
A: An RESP offers you three distinct tax advantages:
- The investment income earned on your principal grows tax-free within the plan.
- The government grants also earn tax-free investment income within the plan.
- Payments from the plan are taxable in your child’s name, not yours. Since students tend to have little or no annual income, little or no tax is payable.
Q: Why shouldn’t I open a Tax-Free Savings Account (TFSA) instead?
A: Tax-Free Savings Accounts are a great way to save for lots of things, but only RESPs are eligible for government grants. For example, through an RESP you can access up to $7,200 in federal grants and any income earned on the grants over the life of the Plan.
Q: How is the money invested?
Our investment methodology is aligned with our corporate vision of helping our clients save for their children's post-secondary education through conservative, long-term investments. Our disciplined savings approach balances the need for income with principal protection and safety from excess market volatility.
Principal protection: Your RESP principal (contributions net of sales charges and fees) and grants are invested in stable and secure fixed-income government and financial institution bonds. The principal will be returned to you at maturity.
Enhanced earning power:The income your principal earns can be invested in the fixed income classes above and a mix of Canadian equities, U.S. Exchange-Traded Funds (ETFs), and investment-grade corporate bonds to make sure your investment earns competitive returns over the life of the plan.
The Plans are managed in accordance with the investment restrictions set out by the Canadian Securities Administrators. C.S.T. Consultants Inc. has provided an undertaking to the securities regulators to modify these restrictions. Download the Undertaking to see the asset classes available in our enhanced investment approach.
Q: Does my RESP require a lot of time to manage?
A: Absolutely not! You only have to make the one-time decision to start a plan, and we’ll do the rest. We manage your funds for you and send you an annual statement of your account. We arrange automatic contributions from your bank account so that you never have to worry about it.
Q: How do I apply for grants?
A: We make it easy to apply for government grants. When you open your plan, simply provide Social Insurance Numbers (SINs) for you and the child you’re opening a plan for and your Sales Representative will complete the necessary forms with you. We’ll submit the paperwork to register your plan with the government and any grants you qualify for will be deposited directly into your child’s plan.
Q: Is it necessary to begin post-secondary education immediately after high school?
A: No. Students can receive up to four payments from the CST Group Savings plan for a qualified full-time or part-time post-secondary program as long as they finish them by the 36th year of the plan. They have the flexibility to take a year off or switch between different programs and schools and still receive payments from their plan.
Q: What types of post-secondary schools and programs apply?
A: We recognize institutions that range from community colleges and universities to vocational, technical, trade and religious schools, and we’re evaluating new schools and programs all the time. Distance learning and correspondence courses are eligible too. Any program of three weeks or more in Canada is eligible. If your child is studying outside of Canada, any university program of three weeks or more is eligible; any other post-secondary program abroad must be 13 weeks or more to be eligible.
Q: What happens if my child does not pursue post-secondary education?
A: You have several options:
- Transfer the plan to another eligible beneficiary
- If your child is over the age of 21 and the plan has been open for more than 10 years, you may transfer up to $50,000 of income to your RRSP or spousal RRSP tax-free, provided you have sufficient contribution room. Government grants will need to be returned to the government.
- Alternatively, you can simply withdraw the income and pay tax on it at your marginal tax rate, plus an additional tax of 20%. Remember, your principal will always be returned to you tax free.
Q: What kind of service can I expect from CST?
A: We’ll send you a detailed statement of all the activity in your plan once a year. You can also view information about your account online any time by registering for secure access on the CST Self Serve Website. We will also provide you with access to our customer care department. And, of course, your sales representative is always there to help you.