Kaleido makes education savings easy for families

Education savings offers many important benefits for financing a child’s post-secondary education:

• Access to government grants, such as the CESG, CLB and—for RESPs in Quebec only— QESI, which can add thousands of dollars to
  your savings.
• Tax-sheltered growth: income generated in the RESP is not taxed as long as it remains in the RESP.
• Withdrawal of tax-free contributions and withdrawal of Education Assistance Payments (EAPs) that count as taxable income for the beneficiaries, who generally have low incomes.
• Flexibility: several options exist if the child does not pursue post-secondary education.

Learn more about the benefits of education savings.

An RESP is an investment portfolio chosen according to your profile and the provider’s approach. It generally includes:

• your contributions (non-tax-deductible);
• government grants accumulated over time;
• investment income generated within the plan.

The Government of Canada sets the rules governing plan management, contribution and transfers.

Yes, it is possible to transfer an education savings account from one provider to another, including to Kaleido. In general terms, here’s what you need to know:

• The transfer takes place between financial institutions via an official form.
• Grants and revenues usually follow the plan.¹
• Some providers may charge transfer fees, depending on their policies.

The government oversees these transfers to ensure the continuity of grants. Would you like to transfer a plan to Kaleido?

First, the Registered Education Savings Plan (RESP) is designed to financially support post-secondary education, while the Tax-Free Savings Account (TFSA) can be used at any time, for any type of project.

The RESP stands out because of its eligibility for government grants (CESG, CLB and—in Quebec only—QESI).

Finally, both RESPs and TFSAs offer tax-free growth. However, Education Assistance Payment (EAP) withdrawals—consisting of grants and accumulated returns—are taxable for beneficiaries, while the withdrawal of contributions for RESP subscribers is non-taxable. In comparison, TFSA withdrawals are completely tax-free.

Several avenues are possible:

• Wait. An RESP has a lifespan of 35 years after it is opened, giving your beneficiary time to change career plans.
• Change the beneficiary² to another eligible child.
• Close the RESP. You will then be able to:
  • withdraw your contributions tax-free;
  • repay grants to governments;
  • choose between transferring the income into an RRSP (up to certain limits) if you have contribution room, or withdrawing the income, which will be taxed and may be subject to penalties applicable in Quebec or New Brunswick.

Learn more in our article “My child is leaving school: what should I do with their RESP?” for details.