It is very important to choose the right type of RESP as they are subject to different contribution rules, withdrawal rules and beneficiary's age restrictions. You can open a RESP account at a bank, credit union, a mutual fund company, an insurance company, an investment dealer or a trust company that offers group scholarship plans.

Basically, there are following three types of RESPs:

1. Individual (Single Beneficiary) Plan:
In an Individual Plan, there are generally no restrictions on who can be the beneficiary. He/She can be a child, grandchild, niece, nephew, or even the subscriber, his/her spouse or an unrelated individual. In this type of RESP 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 even yourself or for any other eligible individual; however, the federal government’s monetary grants like CESG, Additional CESG or CLB can be paid only to the eligible beneficiaries whose age is 17 or under.

With many individual plans, an alternate beneficiary can be named if the original beneficiary does not attend the post-secondary educational program. If all the beneficiaries are under the age of 21, RESP assets from individual plans can be transferred to a Family Plan at a later date.

2. Family (Multi-Beneficiary) Plan:
In a Family Plan, a beneficiary must be less than 21 years of age at the time he/she is named as a beneficiary. You can name one or more children as beneficiary and is ideal if you have more than one child. The children must be related to you, either by blood or adoption. They may be your children, step children, grandchildren (including adopted grandchildren), brothers or sisters.

Under the Income Tax Act, a "blood relationship" is that of a parent child (or grandchild or great-grandchild) or that of a brother and sister. Also, you cannot be considered a blood relative of yourself. Unlike Individual RESP Plan, nieces, nephews, aunts, uncles, and cousins cannot be named as beneficiaries.

The biggest advantage of a Family Plan is that the earnings and the federal government’s monetary grants like CESG, Additional CESG or CLB can be shared among the children named in the RESP. For example, if one child under a Family Plan does not pursue a post-secondary education, the RESP assets can be used by the other child or children named as beneficiary in the plan, provided maximum RESP contribution limits per beneficiary (i.e. $50,000) is adhered to.

3. Group or Pooled Plan:
Group Plans are offered by several Canadian scholarship trust companies. A Group Plan pools the savings for many children and you can also register and contribute for your children or for any child who does not have to be related to you. A subscriber (you) can purchase a certain number of units based on beneficiary's (child's) age at the time of contribution. These units represent your share of the plan. The maturity date of the plan is based on your child's birth date. The scholarship trust company then pools or combines your savings with those of other people and invests in a low-risk investment. When the beneficiary begins attending a qualified post-secondary education, the scholarship trust company funds the education after performing complex calculations based on how much money is in the group account, fees incurred to redeem the investments and number of students of the same age who will be starting school that year. If your child does not begin post-secondary education at the same time as the rest of the group, the earnings you receive from the plan may be affected.

Each Group Plan is different and has its own set of rules. As you would with any investment, be sure to read the plan rules carefully. A Group Plan is ideal if you can make regular payments throughout the term of the RESP as you will have to endorse a contract to make regular payments into the plan over a certain period of time. Fees may apply if you stop these regular payments and the plan may be terminated for you. If you leave the plan before it matures, you get the money you put in, but your investment earnings go to the remaining members of the group. If you stay in the plan until it matures, your child may share in the earnings of those who left the plan early. If you cancel the plan in first few years, you will get back less than what you put in because sales charges are deducted from your contribution. Further, Group RESP is not eligible for federal government's Canada Leaning Bond education grant.

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 that the child you are saving for will continue his/her post-secondary education. The rules for Group RESPs are more stringent compared to other types of RESPs and withdrawals are subject to fees and are based on very complex and not so transparent calculations.

You can also visit http://www.canlearn.ca" rel="nofollow">LINK for more information. This government of Canada website has a wealth of information about educational savings and student financial aid.

Does any one observed getting Additional CESG while self investing thru Questrade brokerage..?
I could not find that information on questrade website...the chat specialists has no clue either..

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MK

I have double checked it. Questrade does offer to apply for Additional CESG. If your net family income is less than approx. $90k you should receive Additional CESG of 10% on first $500.00. If your family net income is less than approx. $45K then you should receive Additional 20% on first $500. Hope this helps.

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Originally posted by myjughead

I have double checked it. Questrade does offer to apply for Additional CESG. If your net family income is less than approx. $90k you should receive Additional CESG of 10% on first $500.00. If your family net income is less than approx. $45K then you should receive Additional 20% on first $500. Hope this helps.

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MK

Additional CESG means, you will get Additional CESG (10% or 20% depending upon income) on top of regular CESG (20%) and Additional CESG is only given on first $500 of contributions.

For example:
1. If your family net income is more than approx. $90K and you contribute $2500 per year. Then you will get regular CESG = $500, no additional CESG

2. If your family net income is more than approx. $45K and Less than approx. 90K and you contribute $2500 per year. Then you will get Regular CESG = $500 + Additional CESG = $50.00 (10% additional on first $500). Total = $550.00

3. If your family net income is less than approx. $45K and you contribute $2500 per year. Then you will get Regular CESG = $500 + Additional CESG = $100.00 (20% additional on first $500). Total = $600.00

I think you advised in previous post that your RESP is with Questrade, which is not a bank. Just a word of caution, not all RESP providers and banks apply for additional CESG.

Further call this number 1-888-276-3624 to get info about your RESP. You may need your and your kid's SIN number.

Happy to help, Sagun Goel

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Originally posted by myjughead

I think you advised in previous post that your RESP is with Questrade, which is not a bank. Just a word of caution, not all RESP providers and banks apply for additional CESG.
Happy to help, Sagun Goel

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MK

Dear MK,

Thanks that I could be some help.

I`m a Financial Advisor Licenced in Ontario and manage RESP for many of my clients and my own kids of course. My investment approach is based on using conservative and secure instruments as I do not like the idea of playing the risk/return game and timing the market with funds set aside for our kids education.

As per this platform's policy, I`m not able to promote my business endeavours and affiliations.

Regards, Sagun Goel