Angela Iermieri | Financial Planner | Desjardins Group
There are two types of registered education savings plans (RESPs). Each has specific features you should be aware of before making a decision because some conditions are more restrictive than others.
Things to remember:
- RESP contributions cannot be deducted from the subscriber's taxable income. - Investment income is tax-sheltered.
- Annual RESP contributions are not capped, but there is a lifetime limit of $50,000 per beneficiary.
- The Canadian Education Savings Grant and Québec Education Savings Incentive are, however, subject to both annual and lifetime limits ($7,200 lifetime limit at the federal level and $3,600 from Quebec)
Here's a brief overview of each type of plan.
(also called scholarship program)
|Available from||Financial institutions and some foundations||Foundations|
The subscriber can contribute any amount at any time, or set a fixed amount to contribute at specific intervals. The subscriber can change, stop or restart contributions at will.
The subscriber deposits to the plan for a stated period of time, according to the savings plan that the subscriber selects and the beneficiary's age.
|Investment options and management||The subscriber chooses where to invest contributions based on their investor profile. |
Available investment products:
|The decisions are up to the foundation managing the plan.|
|Beneficiary|| Individual plans have one beneficiary, while family plans* can cover two or more children from the same family. |
The subscriber is free to change the beneficiary, e.g., if the child does not pursue postsecondary education.
|The beneficiary can be changed if the plan allows it.|
|Educational assistance payments (EAP) to the student||The student receives: ||The returns on investments of all participants of the same age group are distributed.|
|Capital||All capital belongs to the subscriber, regardless of whether the student chooses to continue their studies. |
The subscriber can choose to transfer the funds to the student or claim them and close the plan.
|100% of the capital is returned to the subscriber when their contract comes to an end.|
|Fees||No subscription or account closure fees.||Each group plan has its own rules. Ask your group broker for more information and make sure you're aware of all associated costs.|
To explore investment scenarios, use the RESP calculator.
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*In a family plan, each beneficiary must:
- Be related to the subscriber by blood or adoption or, if the initial subscriber has died, have been related to them in their lifetime
- Be under 21 years old when named a beneficiary or, in the case of a transfer from one family plan to another, have been the beneficiary of the former plan