Recent changes to RESP rules will have positive impact for families

    TORONTO, Nov. 6 /CNW/ - With students back at school, many parents may be
reminded of the expenses of a child's post-secondary education. While the cost
of post-secondary education may not be going down, recent changes to
Registered Education Savings Plans (RESPs) will have parents breathing easier
this year. With more time and more room to contribute, RESPs have become an
even better way to save for tuition fees, books, accommodations and other
expenses that come with a post-secondary education.
    "RESPs have always been a great way for parents to grow savings for their
child's education tax-free, but enhancements to the RESP rules made during the
last two federal budgets have improved these plans significantly," explains
Jamie Golombek, Managing Director, Tax and Estate Planning for CIBC. "RESPs
are more flexible than ever, allowing students to now use any leftover money
for post-graduate or professional studies."What's new:

     -  The annual RESP contribution limit was eliminated last year,
        improving investor flexibility (previously the limit was $4,000 per
        year, per child). This change allows parents to contribute as much as
        they can (within the $50,000 lifetime maximum) to their children's
        education plans, making the most out of bonuses and windfalls.

     -  The RESP lifetime contribution limit has increased from $42,000 to
        $50,000. At a compound interest rate of 5% over 25 years, $8,000 of
        additional contribution room could result in nearly $20,000 extra
        towards a post-secondary education.

     -  RESP contributions can now be made for 31 years - up from 21 years -
        and plans can remain open for 35 years - up from 25 years.

     -  Enhancements were also made to Canada Education Savings Grants
        (CESGs) last year with the maximum annual CESG per beneficiary rising
        to $500, based upon a $2,500 contribution at 20%.

    -   A six-month grace period has been introduced to allow RESP
        beneficiaries to receive Educational Assistance Payments for up to
        six months after ceasing to be enrolled in a qualifying program,
        provided that the payment would have qualified if it had been made
        immediately before the student's enrolment ceased."Make the most of your RESP by starting early and contributing
regularly - such as through payroll deductions - so you're well-prepared for
the costs of your children's education and not overwhelmed when the time
comes," says Golombek. "Talk to your financial advisor about the different
types of RESPs and contribution options that are available to make sure your
RESP is aligned with your overall financial plan and timeline."
    What else can parents do to help minimize the expense of a post-secondary
education?
    "Encourage your children to apply for any scholarships or bursaries which
may now be received completely tax-free," Golombek advises. "Teaching your
children to manage money responsibly from an early age is invaluable in
preparing them for student life and beyond."

    CIBC is a leading North American financial institution with nearly
11 million personal and business clients. CIBC offers a full range of products
and services through its comprehensive electronic banking network, branches
and offices across Canada, in the United States and around the world. You can
find other news releases and information about CIBC in our Press Centre on our
corporate website at www.cibc.com.