You can open an individual plan, a family plan or a group plan. Group plans are only offered by scholarship plan dealers. They tend to have higher fees and more restrictive rules than other plans.
The person who opens the plan is called the subscriber. The person who is named to receive educational assistance payments (EAPs) under the plan is called the beneficiary.
1. Individual plan
An individual plan is intended to pay for the education of 1 beneficiary.
Anyone can open an individual plan and anyone can contribute to it. You can even open a plan for yourself. You usually don't need to make a minimum deposit.
If the beneficiary doesn't continue with their education after high school, you may be able to name another beneficiary.
- You decide when and how much money to put in, up to the lifetime contribution limit of $50,000 for a beneficiary.
- If you have an RESP with a financial institution, you decide how to invest your money. If you have an RESP with a scholarship plan dealer, your money is invested for you.
2. Family plan
A family plan can have more than 1 beneficiary. But each beneficiary must be:
- related to the person who opens the plan (for example, your children, grandchildren, brothers and sisters), and
- under 21 when you name them.
- You usually don't have to make a minimum deposit when you open the plan.
- You decide when and how much money to put in, up to the lifetime limit of $50,000 for each beneficiary.
- If you have an RESP with a financial institution, you decide how to invest your contributions. If you have an RESP with a scholarship plan dealer, the money is invested for you.
Using the money for education:
- You decide how to divide the funds among the beneficiaries.
- If 1 of the beneficiaries doesn't continue with their education after high school, the other beneficiaries can still use the money in the RESP.
Transferring RESP money among your children: You can transfer money between individual RESPs for siblings without any tax penalties. And, you do not have to repay any Canada Education Savings Grants (CESGs). This applies to transfers that take place after 2010. The child who benefits must have been under 21 when the plan was opened.
3. Group plan
Group plans work differently from individual and family plans, and each plan has its own rules. They also tend to have higher fees and more restrictive rules.
You can open a group plan for 1 child. They don’t have to be related to you. You must make a minimum deposit when you open the plan.
- You put money into the RESP according to a set schedule, up to the lifetime contribution limit of $50,000 for a beneficiary.
- The money you put in is pooled with contributions of other investors.
- All of the investment decisions are made for you.
Using the money for education:
- Your child shares in the pooled earnings of investors with children the same age. How much your child receives depends on how much money is in the group account, and the number of children in the group who will be starting post-secondary education.
- Group plans often have additional rules about how much and how often your child can take EAPs, and which education programs are eligible. Know the rules before you open a group plan.
Learn more about how group plans work.
Read Saving for your child's education to compare the key features of individual, family and group plans sold by financial institutions and scholarship plan dealers.
Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca