Individual or Family Plan?
Depending on your needs, you can set up an RESP as an individual plan or a family plan. An individual plan is designed for a single beneficiary, while a family plan lets you save and invest for a number of beneficiaries.
Family Plan
If you already have more than one child, or intend to have more children, a family plan is an attractive option. You can name one or more children as beneficiaries, and add or change beneficiaries at any time. If one of your children decides not to attend a post-secondary institution, your other children can make use of the funds.
A portion of contributions to the plan must be allocated to each beneficiary, although not necessarily equally. For example you can allocate a greater percentage to an older child who becomes a beneficiary a few years before university to quickly build education savings for that child. Meanwhile, younger children could be allocated less because there is plenty of time until they attend college or university. Contributions for each beneficiary can be made until the beneficiary turns 31.
The CESG is paid into the family RESP in the name of each beneficiary until that beneficiary turns 18. The CESG may be used by any beneficiary, to a maximum of $7,200 per beneficiary.
Most RESPs—family and individual—must be collapsed on or before the last day of their 35th year of existence. This should provide enough time to meet education savings needs of most families, including those with children of substantially different ages.
Individual Plan
An individual plan is for one person only. If you want to set up an RESP for someone not related to you, it’s the only choice. The beneficiary can be anyone, including you. There are no age or relationship restrictions. An individual child is also ideal for one-child families or for those who require individual plans for each child.
* If the beneficiary on an Individual RESP is eligible for the Disability Tax Credit (DTC) as per the Income Tax Act, contributions may be made up to the end of the 35th year after the year in which the plan was opened. The plan may remain open until December 31st of the 40th year following the year in which the plan was opened.
