Embark Student Corp. is Canada’s expert RESP company. Managing RESPs for more than 600,000 students, education savings and planning is all we do. Each year, we help approximately 60,000 Canadians attend post-secondary school with the help of one of our RESPs. Since our inception, we’ve paid out approximately $8.1 billion to students as part of their education savings.
We’re owned by a not-for-profit foundation, called the Embark Student Foundation. With no shareholders, the profits we make that aren’t reinvested into the business are put towards supporting students. To date, our foundation has given over $57 million to students and families across Canada.
An RESP, or registered education savings plan, is a tax-advantaged savings account that is partially funded by the Canadian government and helps you plan and save for a child’s post-secondary education. An RESP can contain cash and other investment instruments. Savings grow tax-free while in an RESP. When you withdraw the funds, they’re taxed in the hands of the student, often allowing you to put more of your savings towards their education.
Anyone who is a Canadian resident over the age of majority and has a valid SIN can open an RESP for an eligible beneficiary. Family RESPs may only be opened by a parent, grandparent or sibling of the beneficiary(ies) and beneficiary(ies) must be siblings. Individual RESPs can be opened by parents, grandparents, godparents, friends, or the individual themselves, if of legal age.
Qualifying programs include courses offered by universities, colleges, trade schools, CEGEPs and other institutions certified by the Minister of Employment and Social Development. The program must be of a minimum duration, which changes based on whether it’s full-time or part-time.
RESPs are education savings plans that are registered with the CRA and attract government grants until the end of the year the child turns 17. Savings in an RESP grow tax-free; only earnings or the income earned in the RESP is taxed to the beneficiary at the time of withdrawal. Contributions are not tax deductible. An RESP’s earnings and grants can only be used for educational purposes. A TFSA is a tax-free savings account. Income earned inside a TFSA is not taxed, and what you contribute to the account is not tax deductible. Taking money out of a TFSA has no tax consequences. However, TFSAs are not eligible for education-related government grants. A RRSP is a retirement savings plan that’s also registered with the CRA. Earnings grow tax free, and RRSP contributions are tax deductible, but the funds are taxed to the account holder when they are withdrawn. Any funds withdrawn from a RRSP will attract withholding taxes and be charged at the current tax rate. There is no special treatment to fund education. RRSP are not eligible for education-related government grants.
When you contribute to an RESP, the government matches your qualified contributions by 20% – up to $7,200 over the lifetime of your plan – through the Canada Education Savings Grant (CESG). Eligible beneficiaries can also receive additional support through the Canada Learning Bond (CLB) and other grants. Your savings grow tax-free in an RESP. This means that as long as the money is in the RESP, you won’t have to pay any taxes. When withdrawing your grants, contribution income and grant income, otherwise known as an educational assistance payment (EAP), the funds are taxed in the hands of the student, meaning they typically pay very little-to-no taxes on them, due to their low-income tax bracket.
There is a total lifetime contribution limit of $50,000 per beneficiary (across all RESPs), and grants and grant income can only be used for post-secondary education (in some cases, earnings can be deducted by the subscriber as an AIP).
Beneficiary(ies): The children you are saving for. Subscriber: You – the person who is opening and contributing to the RESP. Provider: Embark Student Corporation – the financial institution that manages and administers the RESP, and helps you collect government grants. Third-Party Contributor: Someone other than the subscriber that contributes to the registered education savings plan. Employment and Social Development Canada (ESDC): Responsible for the administration and delivery of RESPs and the education savings incentives (CESG, CLB and BCTESG). Canada Revenue Agency (CRA): Is the revenue service of the federal government, and most provincial and territorial governments. They collect taxes and deliver benefit programs and tax credits. Because RESPs are registered with the CRA, all subscribers and beneficiaries in an RESP must provide their social insurance number (SIN) to register the plan, allowing the plan to receive tax-advantaged status and attract government grants.
Contributions – Also known as the principal, contributions are the savings you add to your RESP, net of fees. Grants – Are the educational grants the government contributes to your RESP. There are quite a few that you may be eligible for, including the Canada Education Savings Grant (CESG), Canada Learning Bond (CLB) and Quebec Education Savings Incentive (QESI). Find out more about grants here. Earnings – The investment income that your contributions, grants and any accumulated income are generating over the life of your plan.
- A valid social insurance number (SIN) for both you and each child you’re saving for*
- A Government-issued ID
- Personal information for you and your child(ren)
Family RESP plans Family RESP plans can be opened for one or more beneficiaries, who are siblings by blood or adoption, and those beneficiaries can share earnings and government grants (for the CESG, up to its limit of $7,200).
- Family plans may only be opened by a parent, grandparent or sibling of the beneficiary(ies)
- Family plans can have one or more beneficiaries, and each beneficiary in the plan must be a sibling by blood or adoption
- Contributions to the RESP will be designated to each Beneficiary in the plan and attract their own earnings and government grants, but the savings may be shared among the beneficiaries. There is no need to do a beneficiary replacement if one child does not attend post-secondary education, or they do not need all of the funds saved
- Beneficiaries should be under 21
- Individual RESP plans can be opened for one beneficiary only
- Anyone (aunt, uncle, friend, godparent, self) can open an individual RESP plan for a single beneficiary. The subscriber does not need to be related to the beneficiary
- An individual plan is best suited for:
- Subscriber is not parent, grandparent or sibling of beneficiary
- Adult RESP (18-21) where beneficiary and the subscriber are the same person (18+ years old)
- Beneficiary over age 21
A Family RESP can only be opened by a parent, grandparent or sibling, and the Beneficiaries must be siblings (related by blood or marriage/ adoption). The benefit of family RESPs is that both grants and income earned can be used by any beneficiary of the plan. So, if one child has a less expensive education than the other, you can use more of the RESP for one child and less for the other. Even if you only plan to save for one child, we recommend opening a family plan unless the subscriber or beneficiary are not eligible.
The earlier you start saving in your RESP, and the more consistently you contribute, the more the investment income on your principal, grants and earnings will compound over time. This means you’ll typically have more to withdraw. Even if you’re starting to save later in life, the most important step is to take the leap and start saving. Your savings will grow and compound over time, giving your child money to put towards their education.
You can contribute as much as you want per year to an RESP; up to the $50,000 maximum lifetime contribution limit per student. The Canada Education Savings Grant (CESG) will only match 20% of the first $2,500 in contributions per year – or up to the first $5,000 in contributions if sufficient carry forward room exists. To take total advantage of the Canada Education Savings Grant (CESG), we recommend ensuring that you contribute to your plan every year until you’ve received the $7,200 maximum. After reaching the $50,000 lifetime contribution threshold per student, you will incur tax penalties.
You can contribute to an RESP any time during the year. Government grants are applied by calendar year.
There is no limit on the number of plans that an individual can have in their name. For example, a child could have one RESP plan set up by parents, a separate plan set up by grandparents, and yet another set up by an uncle or aunt. Regardless of how many plans there are, the total lifetime beneficiary contribution limit of $50,000 still applies. This means, for example, that all three plans must equal a maximum of $50,000 in order to avoid penalties. It is up to the subscribers of each plan to coordinate their contributions to ensure that lifetime limits are not exceeded. We typically recommend opening one savings plan if possible as it’s easier to manage, keep track of and strategically plan withdrawals. Others can still add funds to an RESP as third-party contributors.
You can open a family plan, which allows you to save for multiple beneficiaries under the same RESP, if they are all siblings by blood or adoption. A family plan will allow you to allocate your contributions to any beneficiary you wish, and the savings, grants* and income you accrue can be shared among the beneficiaries. Each child is entitled to a $50,000 lifetime maximum contribution limit within a family plan. This means that if you have two children within a family plan, you can contribute a maximum of $100,000 without incurring penalties. *to a maximum of $7,200 Canada Education Savings Grant per beneficiary
Yes. Any contribution that exceeds the $50,000 lifetime limit, per beneficiary, is subject to a tax penalty of 1% of the over-contribution, per month, until the over-contribution is withdrawn. Your grants and earnings are not counted towards this limit. If you have RESP’s with other financial institutions, it is your responsibility to ensure that you remain within this limit.
The ESDC does not allow co-subscribers other than spouses or domestic partners for tax purposes. However, anyone who wants to contribute to your child’s RESP can act as a third-party contributor instead of a joint subscriber. This does not have any impact on their contribution.
It’s important to know that an RESP can remain open for 35 years. That’s good news if your student has decided to postpone or prolong their post-secondary education. If post-secondary studies are not in your child’s plans, you can transfer the plan to another student, or consider one of the other ways to withdraw income from your plan and grant growth, like transferring it into your retirement fund (RRSP). The principal contributions you made to the plan can also be returned to you at any time. Grants, however, will be clawed back by the government.
If you have a family plan and a beneficiary is not expected to attend eligible studies and qualify for EAPs, earnings in your plan can be shared among the remaining beneficiaries. If you have an individual plan, or the child is the sole beneficiary in the family plan, you may name a new beneficiary or cancel your contract and redirect your funds, with the exception of your grant, elsewhere.
About the Embark Student Plan
When you contribute towards your RESP, we will invest each child’s savings according to their age and time to graduation, so you can just set it and forget it. Each child’s investments will focus on growth (higher equity focus) when they are young. As your child ages, the investment mix will shift, becoming increasingly conservative over time (more fixed income focus) to preserve your savings as they near post-secondary school. At the end of the year that they turn 17, and are no longer eligible for grants, we will shift their savings into a capital preservation fund.
Under the glidepath approach, the investment mix changes with the beneficiary's age. When the beneficiary is younger, the emphasis is on equity investing to grow your savings. As the beneficiary moves closer to their post-secondary education, the investment mix will shift to invest more conservatively, with an emphasis on fixed-income securities to try and preserve your funds.
As with any investment plan which invests in equities (stocks) and fixed-income securities (bonds), the principal contributions invested are not guaranteed and there is no deposit insurance program that guarantees the principal investment.
You may contribute to your plan by setting up a pre-authorized contribution that will be debited from your bank account. You may also contribute using the bill pay function of your bank account through your financial institution. To set up a pre-authorized Contribution:
- Sign into your Embark account
- From your Dashboard or Main Menu, select “Contributions”
- Follow the on-screen instructions
Yes, Embark offers the option to have multiple pre-authorized contributions (PAC) within the same plan. Contributions don’t need to be the same frequency or come from the same bank account.
Yes, you can set up a pre-authorized contribution plan from your bank account to help you regularly save through our digital platform. You may also set up recurring bill payments from your bank account at most Canadian financial institutions. If you need to stop your scheduled contributions, you can do so and manage all of your pre-authorized contributions and linked bank accounts through your secure account.
If you are getting warnings about how much you can set for your pre-authorized contribution, or your household income is less than $40,000/year, you will need to speak with one of our Education Savings Specialists to ensure you are setting up the best plan for your circumstance.
Absolutely, we encourage lump sum contributions when you have extra funds; the lifetime contribution limit is $50,000. Just remember that you’ll typically only attract grants on the first $2,500 contributed per year and up to $5,000 if you have the carry-forward room.
No, you can only save through pre-authorized contributions from your bank accounts or through the bill payment feature when online banking with a Canadian financial institution.
You may request a return of some or all of your contributions at any time. At Embark, we have simplified these withdrawals so that you can withdraw your funds in the least possible steps and with maximum ease. Just let us know if the withdrawal is for education or not, and we will do the work for you.
Management fee Embark will charge 1.65% MER annually plus applicable taxes. This means we’ll take or $16.50 for every $1,000 invested plus applicable taxes, deducted directly from plan earnings, or if earnings or insufficient, from contributions. The Embark prospectus does allow for the MER to be increased to a maximum of 1.99% per year, plus applicable taxes. For example, this would be a maximum of $19.90 for every $1,000 invested. This fee pays for investment management costs, operating, managing, and administering the Plan, including record keeping, trustee, valuation, distribution, and custodial services. Independent Review Committee Fees As required for all publicly offered investment funds, this fee is to pay the IRC members and secretariate for providing independent review committee services for Subscribers. The costs are shared proportionately with all Embark Corp. Plans (including the grandfathered plans: Flex First and Family Single Student). The following are the annual fees to be paid to the IRC:
- Chairperson - $20,000 (plus GST/HST)
- Each Member - $15,000 (plus GST/HST)
- Secretariat fee - $40,000 (plus GST/HST)
Upgrading to the Embark Student Plan
There is no cost to upgrade your Family Single Student plan to an Embark Student Plan.
Yes! We would be happy to upgrade eligible individual Family Single Student Plans into one family plan.
The Embark Student Plan has been built to provide you with a cutting-edge investment and digital platform. To ensure that the Embark Student plan is right for you, we are required to verify your information, and that the investment is suitable to meet your needs. Once you set up the new account, you can also access the new cutting-edge digital experience, and discover the convenience of saving on the go, with built-in insights on our new secure and interactive platform.
All of the contributions, grants and earnings in your Family Single Student plan(s) will be transferred into your Embark Student Plan when you upgrade, and your Family Single Student plan will be closed. Your transaction history on your former Family Single Student Plan will no longer be available to view online. There is no cost involved in transferring from a Family Single Student Plan to an Embark Student Plan.
No, you will need to set up new pre-authorized contributions (PAC’s) for this plan. These can be set up in your account on embark.ca
Your Embark Student Plan will be enrolled once you complete the onboarding experience. Your account on embark.ca will be available to manage your plan, add pre-authorized contributions and more. It may take a couple of weeks for the transferred funds to appear in your account as we fulfill the transfer.
Your new account on embark.ca will house all of your enrolment documents, quarterly account statements for the Embark Student Plan and any tax slips.
While we believe that a Family Plan provides the most flexibility, value and ease for eligible subscribers and beneficiaries, if you feel that individual plans are more suitable for your needs, you can transfer your plans to individual Embark Student Plans by conveniently scheduling an appointment with our Education Savings Centre.
The Embark Student Plan does not feature insurance coverage. If you upgrade your plan, any group life and total disability insurance coverage that you may have received under the Family Single Student Plan will be terminated, and you will no longer have this insurance coverage on the Embark Student Plan. To talk this over with an expert and see how this will affect your plan, please conveniently book an appointment with our Education Savings Centre.
Yes, you may transfer your RESP from an individual plan to a family plan. Remember however that, to open a family plan, the subscriber needs to be a parent, grandparent, or sibling of the beneficiary. If not, don’t worry, we’re also offering individual Embark Student Plans, which can be opened by anyone. See if you’re eligible today!
When you complete the RESP application, Embark will automatically apply for government grants on your behalf. There are additional grants that your beneficiary(ies) may be eligible to receive, depending on the province of residence and/or their household net income. We’ll help you get all of them, including: The Canadian Education Savings Grant (CESG): this grant is provided by the Canadian government and is the cornerstone of contribution matching. The government matches your contributions up to $7,200 over the lifespan of your RESP. You’ll receive a grant of 20% of whatever you contributed, up to a maximum of $500/year. Once you’ve set up your Embark Student Plan, we automatically apply for this grant on your behalf. If you started late or contributed less than $2,500/year in previous years, you can carry forward those missed amounts to current or future years. Read more about carry forwards. Additional CESG: Lower- and middle-income families may qualify for an additional amount of CESG or ACESG, which means an extra 10% or 20% are applied to the first $500 of annual contributions each year. Eligibility depends on the adjusted income level of the child’s primary caregiver. The income levels are updated every year. The maximum amount of CESG, including the Additional amount, a child can get is $7,200. CESG eligibility restrictions for children aged 16 or 17 Children who are 16 or 17 years old may be eligible to get the CESG. To be eligible, they must meet at least one of the following conditions before the end of the calendar year they turn 15: at least $2,000 is contributed to (and not withdrawn from) the RESP a minimum annual contribution of $100 is made to (and not withdrawn from) the RESP in any four previous years Canada Learning Bond (CLB)- is money that the Government adds to the RESP for children from low-income families. There are no contributions required to receive the CLB. This includes $500 for the first year of eligibility and $100 each year the child continues to be eligible (up to and including the benefit year in which they turn 15). Income eligibility depends on the number of children in a family and adjusted net family income. More information can be found at: https://www.canada.ca/en/employment-social-development/services/learning-bond/eligibility.html CLB for 18- to 20-year-olds Eighteen to 20 year olds may be eligible to receive the CLB; you could get up to $2,000 into an RESP. The amount of money you will receive depends on the number of years you were eligible to receive the CLB, before you turned 15 years old. If an 18- to 20-year-old was eligible for the CLB and has not received it yet, the Government of Canada will deposit into an RESP: $500 for the first year that you were eligible, and $100 for each additional year you were eligible up to the age of 15 More information about eligibility can be found at https://www.canada.ca/en/services/benefits/education/education-savings/learning-bond-18-20/eligibility.html British Columbia Training and Education Savings Grant (BCTESG): is a one-time payment of $1,200 per child paid to beneficiaries who are residents of BC and whose parent is a BC resident at the time the grant application is made. Applications for the BCTESG can be made between the day the child turns six and the day before the child reaches their ninth birthday. Quebec Education Savings Incentive (QESI): If your child is a resident of Quebec, you could earn up to $3,600/child as part of the Quebec Education Savings Incentive (QESI). This grant is provided as a refundable tax credit from Revenu Québec that is deposited directly into your RESP. If eligible, you will receive a grant equalling 10% of your annual RESP contribution –up to $250 per year, with a lifetime maximum of $3,600 per child. Depending on your income, you can earn an extra 5 to 10% of the first $500 contributed each year. Additional QESI: to help low- and middle-income families, an additional amount of up to $50 per year, calculated on the basis of family income, may be added to the basic amount, based on your income and annual contribution. www.revenuquebec.ca/documents/en/publications/in/in-129-v%282015-10%29.pdf
Within the basic Canada Education Savings Grant, the government matches 20% of the first $2,500 you contribute to your RESP, annually. This gives you an extra $500 in grants each year if you maximize your savings. Children from middle- and low-income families might be eligible to receive an Additional CESG. If you are eligible, an extra 10% or 20% will be added to the first $500 you contribute to an RESP each year, allowing you to grow your plan faster. Keep in mind that the total combined lifetime maximum for the CESG and ACESG is $7,200 per beneficiary.
The Canada Learning Bond provides a one-time initial grant payment of $500 to an eligible beneficiary’s registered education savings plan. The government will automatically add $100 for each year of eligibility until your child is 15 years old. Over time, that could add up to as much as $2,000 in grant payments, plus interest. Eligibility is based on net family income and number of children. Learn more about the CLB here.
If you haven’t been able to take full advantage of the 20% Canadian Education Savings Grant (CESG) by contributing $2,500 to your child’s RESP annually, you can still catch up as unused grants accumulate for future use as “carry forward room.” If you have carry forward room, you can make contributions for each beneficiary, up to a total of $5,000 per year ($2,500 in regular contributions + $2,500 in catch up) and receive the 20% CESG, or a maximum annual CESG payment of $1,000.
Withdrawing from Your RESP
An EAP is any amount paid or payable under an RESP to or for an individual, called the beneficiary, to assist with the individual’s education expenses at the post-secondary school level. These amounts only include your grant, grant income and investment income. They do not include your initial contributions to the plan. Learn more about the types of payments here.
Yes, your contributions, less any applicable fees, can be withdrawn without incurring taxation. Your grant income and investment income, however, will be subject to taxation.
An accumulated income payment (AIP) is a payment of the accumulated income from an RESP that is not a part of an education assistance payment. There are some conditions around who and when an AIP can be withdrawn. As a Canadian resident, you can receive an AIP if:
- You have held your RESP for at least 10 years
- Your student is at least 21 years of age
- Your student is not eligible for an Educational Assistance Payment (EAP)
- Your plan has existed for 35 years; or,
- All of the beneficiaries are deceased
The post-secondary education (PSE) withdrawal is a withdrawal of the contributions to the plan. These are your contributions and can be withdrawn tax-free.
Once the student is enrolled in a qualifying post-secondary education or training program, the accumulated income, grants, and earnings within the RESP can be paid out to the student.
If withdrawing funds for educational purposes, the Canada Revenue Agency (CRA) requires proof or confirmation of enrolment to withdraw funds from an RESP. This document can usually be downloaded from the education institution’s website or obtained from the institution registrar’s office.
An EAP is a withdrawal of Government grants and the Income earned in your RESP. The CRA sets some limits on EAP amounts:
- $8,000 for the first 13 weeks of study in a full-time program
- $4,000 for each 13 weeks of study in a part-time program
The verification of enrollment documents are valid for six months. A beneficiary is entitled to receive EAPs for up to six months from enrollment or graduating from a qualified education program. If the window is missed, the RESP remains intact until Dec 31st of the 35th year from when it was opened. The beneficiary can use the funds for another program with a new verification of enrolment. If the beneficiary is not eligible to receive any remaining EAP, you will still have the options to request an AIP. In this case any remaining grant will be returned to the government.
If the beneficiary’s status is Native Indian, the RESP contract is not affected when releasing funds for maturity and EAPs. The beneficiary will be required to complete the proper documents and submit their Verification of Enrolment forms in order to receive the payments, just like any other student. The only difference is that they may not be required to pay taxes for the EAP amounts received due to their status. You may obtain further clarification from the Canada Revenue Agency on tax implications at: 1.800.959.8281.
RESPs and Taxes
RESP contributions are not tax-deductible, although we can understand why you might think they are (RESP sounds a lot like RRSP). The benefits of RESPs are a bit different, with the key draw being the free money you get from government grants.
A post-secondary education (PSE) withdrawal, which represents your contributions, can be withdrawn tax-free. Your educational assistance payments (EAPs) represent your government grant money as well as your investment and grant income. EAPs are taxable income for the student beneficiary.
If your student has higher taxable income during their post-secondary education, please call us and we can help you allocate your withdrawals to minimize their tax exposure.
In some cases, you may want or need to withdraw money from your RESP for non-educational purposes. While you may withdraw your contributions at any time without being taxed, the withdrawal of any income earned on your contributions from an RESP is taxed (that withdrawal is called an Accumulated Income Payment or “AIP”). To withdraw your investment income, your RESP needs to have been open for at least 10 years, or your beneficiaries must be over the age of 21 and not currently pursuing a post-secondary education. In addition, withdrawing your contributions may also result in the government clawing back grants that it had previously contributed to your RESP, so it is wise to be aware of such implications. Grants and the income you earn on them will also need to be returned to the government if it is not used while your child is in post-secondary school. For more information on what you can and can’t do, please take a look at the CRA’s website.
In order to eliminate or ease the tax impact of receiving an AIP, the subscriber may want to transfer the accumulated income to his or her RRSP or to a spousal RRSP. This helps avoid having to pay taxes on the amount, as long as the subscriber has unused RRSP contribution room and does not exceed the age limit for making RRSP contributions. When the transfer takes place, the plan is terminated. Any remaining contributions are returned to the subscriber and any remaining grants are returned to the corresponding government. The maximum amount of the accumulated income that is available for transfer is $50,000 per subscriber.
To begin the withdrawal process, all you need to provide us with a valid verification of enrolment form from a designated educational institution for an approved course per the Income Tax Act of Canada. After that, all we need is your desired banking information and we’ll process the withdrawal!
Typically, you can expect your withdrawal request to be fulfilled within two business days of being processed. Please note that fulfilment may be delayed if the request requires a review.
It is typically wise to front-end load your withdrawals with taxable educational assistance payments (EAP) and withdraw your contributions when all else is depleted. This is because your investment income, which is included in an EAP, is subject to significant taxation when withdrawn, should the child stop, not attend or finish school. Grant and grant income are also clawed back by the government if it is not used while the student is in school and the plan is closed. It also makes sense on the assumption that a beneficiary may have lower income from other sources (summer or part-time jobs, for example) in the early years of their post-secondary education as compared to their later years (e.g. co-op placements), allowing you to maximize the value of your savings. Investment income can be transferred into a subscriber’s Registered Retirement Savings Plan account to the extent they have RRSP room.