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Which Type Of RESP Is Best For Me?

Jun 30, 2022

It is very important to choose the right type of RESP. You can open an RESP at any bank, a credit union, a mutual fund company, an insurance company, an investment dealer or a group plan dealer.


There are 3 types of plans:


Family Plan

A family plan is ideal if you have more than one child. You can name one or more children under the plan. These children must be related to you, either by blood or by adoption. They may be your children, adopted children, grandchildren or even your minor brothers and sisters. Although, The Canada Education Savings grant and Canada Learning Bond can only be paid to the planif all of the children named in the plan are siblings. So it is best to name your own children. The advantage of family plan is that the earnings can be shared among the children and the grants may be used by any beneficiary named in the RESP, to a maximum of $7,200. Which means that if your oldest child does not pursue college, the grants can be transferred to the younger siblings instead of being taken back by the government. In this type of plan, your child is not required to use the funds right away, after graduating high school. This type of plan has 35 years of maturity. So your child has some time to think about what they really want.


Individual (non-family) plan

This type of plan is ideal if you are not related to the child you are saving for. In this type of plan, only one beneficiary is named in the RESP, and the beneficiary does not have to be related to you. You can open this type of RESP for yourself or for another adult; however, the Canada Education Savings Grant and the Canada Learning Bond can be paid only to eligible beneficiaries. This type of plan also has 35 years of maturity.


Group plan

A group plan is being offered by a group plan dealer, mostly under a Trust company and works differently from an individual or family plan. Each account is for 1 child only, and the child does not have to be related to you. So if you have more than 1 child, you have to open a separate account for each child you have. Group Plan is ideal if you can make regular payments throughout the term of the RESP. Your commitment is required for this type of plan. In this type of plan, your savings are combined with those of other people. How much each child gets depends on how much money is in the group account, and on the number of students of the same age who are in school that year.
These plans are provided by group plan dealers who usually invest the money in low-risk investments which also offer low returns on investment. Each group plan is different and has its own rules. As you would with any investment, be sure to read the plan rules carefully.
Usually, you will be asked to commit to making regular payments into the plan over a certain period of time. Fees may apply if you stop these regular payments or may cause your plan to be terminated.. Group plans are a good option if you prefer to have someone decide how to invest the money for you and you are fairly certain the child you are saving for will continue his or her education after high school as it may not be refundable.


Click the link below if you like to know how you can access the funds to use for your child’s Post-secondary education.