RESP's been around for a long time. In 1998 the Federal Government started providing a matching grant on Canadians contribution to RESP's. Due to this as well as other changes to how the plan works, the popularity of them as a vehicle to save for children's education has skyrocketed.
There are two types of plans:
- Family RESP - this plan covers all of the children in a family; additional children can be added in the future; the money in the plan can be used for the benefit of any of the beneficiaries
- Individual RESP - this plan covers one child; when a family has their first child they must open this type of plan - in the future if they have another child this plan can be switched to a Family RESP
These two types of RESP plans have these features:
- All beneficiaries are eligible for a 20% grant on the first $2500 contributed in any year
- The maximum amount of grant a beneficiary can receive is $7200 lifetime
- The types of investments that you can own in an RESP plan are similar to those that you can own in an RRSP
- There are a wide range of educational institutions that beneficiaries can attend including full and part time study at University, Community College, vocational and technical colleges in Canada and many universities outside of Canada
- If the plan has been open at least 10 years and your child does not go on to post secondary education there is a way to get your money back (except for the grant)
- You can own as many RESP's with whichever financial institution you prefer
Your financial advisor can tell you more about all of the above plus everything else you need to know about saving for your children's or grandchildren's education.