Getting the facts about RESPs: Individual or Family Plan
Some Canadians already know that Registered Education Savings Plans can be a good way to maximize savings for post-secondary education, particularly because of the potential for government grants.
Last year alone, Canadians held $44 billion in RESP assets and more than half of parents opened an RESP account to save.
However, there are both individual and family plans available, so parents may not know which one to choose and why:
The Individual Plan - Unlike a family plan that requires the beneficiary to be under 21 years of age when named in the plan, this age limit does not apply to an individual plan. An individual plan is perfect for a family with only one child who will not have to worry about sharing the assets. It's also a good option if you'd like to set up an account for someone who is not related to you, or if you want to save for your own education.
The Family Plan - If you have more than one child, a family plan may be right for you, because you can share the savings among all your children. In a family plan, all beneficiaries must be related to the promoter by blood or adoption, such as grandchildren, great-grandchildren, brothers or sisters. The promoter can also add or change beneficiaries during the life of the plan. When distributing the money, each beneficiary must use a portion, although the portions are not necessarily equal
In Quebec for THE FAMILY PLAN, there are some disadvantages and they are located with the QESI among others or else the Quebec Incentive for Educational Savings, of its real name and especially with the technicalities of the plan. Here are the two explanations, according to several experts:
First, parents complain that the Quebec grant (QESI) is late or never deposited into their child's RESP account. I can confirm this because it has already happened to some of my clients. This has been a recurring problem for a long time.
Second, if parents contribute the maximum amount allowed for each child in this type of plan, the RESP beneficiary cannot benefit from more than the $10,800 grant limit. This means that a child cannot expect to collect what a sibling has left on the table.
You can always contact me if you have any questions.
I invite you to read my blog of the month for March 1, 2022: https://www.patrickjosephservicesfinanciers.com/blogues/le-reee-familial-peu-avantageux
Source la Presse and TD Bank
