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CH5 SCHOLARSHIP Plan (Administration of Scholarship Plans (• Not-for…

- - - - Subscribers’ contributions are held by the Plan’s trustee in a pool that is invested collectively on the instructions of the Plan’s portfolio managers.
      - While the funds are managed and invested collectively, the Plan’s administrator tracks each subscriber’s contributions, CESGs, other government grant programs. then share of investment returns separately.
      - Subscribers’ contributions are typically administered on an “age group” or “maturity date” basis. The subscriber determines when the beneficiary is expected to start their post-secondary education (often when the beneficiary turns 18) .To participate in a Group Plan, subscribers must typically join the Plan before their beneficiary reaches the age of 13 or 15 (depending on the Plan).
      - Subscribers to a Group Plan agree to buy “units”, either through a lump sum contribution or through a series of periodic deposits, such as annual or monthly contributions.
      - The amount that must be contributed for each unit is determined by the Plan’s actuary and depends on the frequency of the contributions made and the number of years before maturity. Deposits are structured so that no matter when a subscriber starts to contribute, all units have earned approximately the equivalent amount of income by the time the Plan matures.
      - Those who do not pursue post-secondary education leave their share of income to those that do (this does not include grant funds associated with those beneficiaries, which are returned to the government)
      - EAPs are typically made up of income earned on contributions, income left behind by terminated Plans, grant and income on grants. With some Group Plans, it may also include a refund of all or a portion of the enrolment fees.
      - Investment income earned on the pool after maturity is normally accumulated in a general fund (often called the Income Account or Enhancement Fund). These funds may be used to pay certain expenses of the Plan
      - Group Plans may have different programs for the payment of EAPs. Some allow beneficiaries to claim their EAPs from the Plan over a specified number of years, while others allow subscribers to select from various options that spread EAPs over shorter or longer periods, such as with a Self-Directed Plan.
      - Subscribers in a Group Plan often have the option of transferring their Plan to an Individual or Family Plan if they do so in advance of their Plan’s maturity date. This may be advantageous for subscribers if it appears that their beneficiary will not be in a position to take full advantage of the EAPs available under the Group Plan.
  - - - Transfer the income that was earned in the Plan (including the income earned on CESG funds) up to a maximum of $50,0000 to an RRSP if the subscriber has unused RRSP contribution room, or
      - Withdraw the income as an AIP and pay income taxes on that income plus the 20% tax penalty
  - - - The beneficiary is entitled to the disability tax credit ending in the 32 nd year of the Plan’s existence.
      - No other individual may be named beneficiary in a Specified Plan.
      - No contributions (except transfers from another RESP) may be made in or after the 37the year of the Plan.
      - A Specified Plan can stay open for a maximum of 40 years