This, in fact, is a question that we get from most parents who are keen on making the best decisions for the education of their children at Canadian LIC. Actually, this is where the key differences are. An Individual Plan RESP has only one beneficiary, usually one child. On the other hand, a Family Plan RESP can have as many beneficiaries as one wants, so long as they are related to a person by blood or adoption.

We had one client, Sheeba, who opted for an individual plan for her first child. She then had a second child and realized she needed a second RESP, which doubled her management RESPonsibilities. This situation is not unique, and this is why we always recommend taking into consideration how many children you’re going to have before choosing an RESP.

Yes, one of the most significant advantages of a Family Plan RESP is that you can transfer funds between the children. That flexibility is important if one child doesn’t go on to post-secondary education or another child requires more funding.

We’ve learned this from personal experience with clients like the Robinson family. When their oldest child took a gap year, they redirected the funds to their younger child without penalty. None of this could have occurred had they gone down the path of an individual plan, so the flexibility inherent in a family plan is what we learned.

Taxes might sound a little confusing, so let’s make it simple. When you withdraw from an RESP, your contributions are tax-free since you made them with after-tax dollars. The investment income and government grants, however—referred to as Educational Assistance Payments, or EAPs—are taxable in the hands of the beneficiary, usually your child, who very likely has a lower tax bracket.

If you are not exactly sure how much tax your child might have to pay, using an RESP Withdrawal Tax Calculator could be an excellent way to try and get an estimate of the potential tax impact. We do this all the time with clients—to help walk through what the tax impact might be before making a withdrawal.

That’s a common question and something that we help many parents navigate. This is if your child does not go to post-secondary school and you have an individual plan. You can either transfer the RESP to another beneficiary who is related by blood or adoption, or you can withdraw the funds, but you’ll have to pay taxes on the earnings and return any government grants.

For instance, a Family Plan RESP carries a lot more flexibility; transferring the funds to another child without any penalties, as long as they are eligible for the funds, is easy. That line of safety ensures you have peace of mind and reassurance that your savings will not have been squandered.

While you can get an RESP Quote online, this is one of those areas where we always recommend a call with a professional. No two families are alike, and an online quote will not be able to capture that uniqueness.

We at Canadian LIC have often found people reach a decision based on online quotations, only to be rudely surprised later by the benefit they could have availed or the wrong assumptions they had made. By associating with a professional, you will be able to ensure that you make a choice that is right for your family.

Yes, you can over-contribute, and it’s something we always point out to our clients. Each child has a lifetime contribution limit of $50,000. If you go above this limit, you will incur a penalty of 1% per month on the excess amount until it’s withdrawn.

This actually happened to one of our clients, Mr. Adams. He had been so keen on saving for his children’s education that he found himself contributing too much. We helped him solve the problem, but he went through a hectic time that could have otherwise been avoided by careful monitoring.

With either plan, the Canada Education Savings Grant (CESG) will match 20% of your contribution, up to $500 annually per child, with a lifetime maximum of $7,200. In family plans, you do have to be careful in your allocation to make sure each child maximizes their CESG entitlement.

We had one family, the Lees, who did not realize they were not properly balancing the contributions between the two kids. One child received more grant money; however, we helped to adjust the contributions going forward for proper balance. It was a learning experience. For example, the Family Plans RESPs—can be such that parents get confused about how it really works with the CESG.

This depends on your family situation. Individual plans are easy to handle with one child but become a headache if one has more than one child since you will have many accounts to handle.

An RESP family plan can be a bit more complicated because you have to keep track of contributions and grants for each child within one account. Nevertheless, many of our clients, like the Thompson family, find that the flexibility of the family plan is well worth that added work. We often provide tools and tips, like using an RESP Withdrawal Tax Calculator, to help parents manage their RESP effectively.

Technically, you can, but most people don’t. Most families use one type of plan. If you have some special situation—like if there are two sets of grandparents, and each wants to contribute to a different account—it might make sense to do both.

We’ve seen many cases where grandparents set up an individual plan with a grandchild, for example, but the parents may have a family plan that covers all their children. We can certainly help you coordinate those two plans without busting the contribution limits or losing any grants.

Of course, the best way to choose is by considering what suits your current family situation and future plans. If you have one child or do not plan on having more, an individual plan might be simpler. If you have multiple children or plan to, a family plan offers more flexibility.

At Canadian ‘LIC’, we consider it part of our job to help families assess their potential and present options, and by using tools like the RESP Withdrawal Tax Calculator, we make an informed decision. We have helped so many families make decisions that would fit into their general financial plan and, by extension, into the general plan for children’s education.

Yes, you can change the beneficiaries with the Family Plan RESP, and actually, that is one of the reasons why many of our clients choose it. For example, we have a client—the Taylor family—who, when the Family Plan RESP was first set up, named two older children as beneficiaries. They just added their newborn baby girl to the plan, and now all three children can benefit from those savings. They wouldn’t have found that quite as easy with individual plans when they had to open a new account for each child.

Especially in a family plan, if your child does not use all the funds, then you can transfer the remaining funds to another beneficiary. This is where a family plan truly excels. For instance, the Thompson family had three children, and the oldest child did not require all the funds that were allocated to him. With a family plan, they easily redirected the remaining money to their younger children, ensuring nothing went to waste.

With an individual plan, you are able to withdraw unused funds; however, you will have to return the grants to the government, and the earnings will be taxed. This is why so many parents find the flexibility of a Family Plan RESP offered in Canada to be very valuable.

Since a variety of investment options exist within RESPs, you want to invest in something that mirrors or reflects your risk tolerance and time horizon. We remind our clients—like in the case of the Morgans—just how much time they have until the kids actually get to post-secondary education. For example, Mrs. Morgan was quite aggressive at first, but by discussing goals and the timeline, we reset to a more balanced strategy in order for the RESP to grow steadily without much risk.

If you are not convinced about the right type of investments that should be placed in your RESP, it is advisable to obtain RESP Quotes Online or seek professional advice.

Taking money out of the plan early can be a hassle, certainly, if you haven’t yet reached the point of using the money to help finance a child’s post-secondary education. At Canadian LIC, we’ve seen clients like Mr. and Mrs. Chen, who needed to withdraw funds due to unexpected financial difficulties. We explained that while they could access their contributions tax-free, withdrawing the grant money or investment income would mean paying taxes on those earnings and repaying the government grants.

We always advise using an RESP Withdrawal Tax Calculator to understand the potential tax impact before making any decisions. This tool helps our clients see the bigger picture and avoid unnecessary penalties.

In order to gain the maximum benefits of an RESP, it is recommended that large amounts be contributed from an early life stage in Canada and maximize the CESG through grants. We recommend that all our clients establish an automatic RESP contribution, like our Singh family. This can be done directly from your bank account, or your funds can be transferred to the RESP investment account. This way, they didn’t miss out on any government grants, and their RESP balance always grew consistently over time.

Finally, regular financial advisor reviews ensure that your investments in the RESP are strictly in line with your goals and that you are on track to achieve the savings objective. While getting quotes online can be a good start, personalized strategies for your family may be best developed with advice from a professional.

Yes, anyone can open an RESP for a child, provided you have the child’s SIN number. This is a very common scenario that we see at Canadian LIC—whereby grandparents or other relatives would like to contribute to the education of a child. For instance, Mr. Thakare opened an RESP for his niece. He wasn’t quite sure how the plan should be structured, so we helped him set up an individual plan tailored specifically to her needs.

If you’re thinking of opening an RESP for someone else’s child, there are going to be some associated RESPonsibilities, and we are here to guide you through that.

Finally, you can withdraw from your RESP when your child reaches college-going age. At this point, you will need to provide proof that your child is enrolled in a qualified post-secondary institution. The funds can be withdrawn in two ways: contributions, which are tax-free, and Educational Assistance Payments (EAPs), which are taxable in your child’s hands.

We always advise our clients to be very careful in planning their withdrawals to minimize taxes. For example, the Davis family worked with us to structure their withdrawals over several years so that their daughter would remain within a low tax bracket while in school. An RESP Withdrawal Tax Calculator will give you an estimate of just how much tax your child may have to pay and help you plan.

Yes, you can move your RESP to any other financial institution. However, beware of transfer charges or penalties, if any. We have cases where, for example, the Miller family was seeking to move to another institution with better investment options and more affordable management. We helped them through the transfer process while ensuring that they retain their benefits or grants throughout the process.

Get quotes online for RESP before you transfer to a comparison of the different institutions’ offerings so you can make the best decision that suits your needs.

Such incorporation of your Whole Life Insurance into your estate planning is an important aspect if maximum benefits are to be derived. We have assisted Edward of Toronto in tailoring his policy towards his estate plans so that the benefits accrue maximally and in a tax-effective manner to his heirs.

In most cases, the best time to buy is when you are young and healthy. The premiums at that time will be quite affordable. However, it is never too late to start. We have advised a 50-year-old lady from Edmonton called Linda, who felt it was a bit late to be getting the insurance. Our agents still gave her options with huge benefits at her age.

Opening an RESP account is pretty easy. First, select a provider—like the Canadian LIC, known for its reliable guidance when it comes to opening Education Savings Plans across Canada. Next, the beneficiary of your RESP could be your child, relative, or even your family friend. Finally, some identification for you and your beneficiary will be required. Keep in mind that you can get individual RESP Quotes directly online from our website, so it really does not matter where you are or what time it is. One of our clients, a busy mother of two, used our online platform to set up her plan during her lunch break!

Absolutely! RESPs are flexible and can include full- or part-time studies at colleges, universities, trade schools, or any other vocational programs. We once had a family where the eldest child used the funds to pursue studies in culinary arts at a vocational school with the help of an RESP, showing how versatile the plan is. The important thing is that it has to be an educational facility that falls under the guidelines of the Registered Education Savings Policy.

When you set up an RESP in Canada, you automatically get many government grants. A chief among them is the Canada Education Savings Grant (CESG), which matches up to 20% on the first $2,500 put in an RESP annually. There’s also the Canada Learning Bond (CLB) for eligible families, which is nothing short of a bonus since there’s no requirement for parents to make personal contributions. Most of the time, we find our clients pleasantly surprised by how much the grants can help with their savings!

Yes, there are some limits to which you need to be aware. The lifetime contribution limit for an RESP is $50,000 per beneficiary. There is no annual contribution limit; however, a strategic approach to contributions is important in maximizing government grants. A father from Montreal shared how he spaced out contributions to ensure he maximized the government match each year, planning effectively for his daughter’s education.

Suppose the beneficiary does not attend any post-secondary education. In that case, you then have a few options to consider: You can transfer money to another beneficiary or withdraw your contribution without penalty. Any growth in the account and government grants can be transferred to your RRSP or withdrawn with implications. We have dealt with a client whose son decided to pursue business instead of furthering his education in college. We helped them restructure their plan in such a way that they could best support their child in entrepreneurship.

An RESP requires one to sign up, open an account, and ultimately make contributions. Canadian LIC can walk a person through these steps so that the individual will truly understand all the fine details involved. Our agents are skilled at explaining complex information in simple terms to help you make the best decisions for your family’s educational future.

Yes, you can change your investment options over time, depending on your risk tolerance and how many years are left until your child starts their education. We will, on a regular basis, review plans with the client to ensure that the investments remain appropriate for their changing needs and goals. This could be illustrated by the recent example of the couple who were transferring into more conservative investment choices as their child was approaching the end of high school.

Comparing RESP options is of key importance. Consider those plans that have flexible contribution schedules, numerous choices of investment, and competitive fees. You can easily compare a number of plans using the “RESP Quotes Online” tool from the Canadian LIC website. This tool was especially helpful to a family who were new to Canada in understanding their options and choosing which one was best for them.

RESP is an extremely good instrument for providing safety to your child’s future education.

You can begin withdrawing from your RESP when your beneficiary starts a post-secondary qualified educational program. In this regard, Canadian LIC suggests planning to withdraw early in education to benefit from the longest possible investment time. A recent example is a client who initiated withdrawal prior to the first semester starting so that tuition fees and the price of books could still be covered on time.

With several children, it is more economical to administer one RESP with several beneficiaries all under one plan. This method ensures that the distribution of the funds across the children is more flexible. A family of three children spoke on the flexibility provided by a family plan. “Since the beginning, we knew at what time and how the money would be divided among children, given their age and time of entry to college. This flexibility helped us plan accordingly for them.”

Canadian LIC has an “RESP Quotes Online” that is user-friendly when comparing the various RESP plans. It makes the features and benefits of the various plans understandable at a single glance. For example, a young couple was able to select the most suitable plan for their newborn after comparing several options online, making their decision-making process smoother and more informed.

This will ensure that your annual contributions reach the threshold necessary to qualify for maximum government grants, which are $500 annually for every $2,500 in contributions. Canadian LIC can help you set up a contribution schedule that works with your finances and maximizes grant eligibility. We once had a client who lost a year’s grant because he needed to contribute more; we helped the client adjust his future contributions so as not to have this happen again.

While contributions to an RESP cannot be deducted from income, the growth on the investments, along with government grants, goes untaxed until the money is taken out. When those funds are withdrawn for education expenses, they are taxed in the hands of the student, usually resulting in little or no tax payable because they have little or no income. We helped a family plan their withdrawals to minimize their tax burden, effectively using the RESP to cover their son’s entire university tuition without additional taxes.

RESPs should be part of your bigger financial strategy, notably in regard to retirement savings and debt management. Canadian LIC will give you advice on how to strike this very balance: making sure that saving for the education of your child isn’t at the detriment of your overall financial well-being. For example, we helped a family ensure that their contributions to RESPs were aligned with a good retirement plan so that they would have both their children’s futures and retirement in good hands.

Congratulations if your child lands a scholarship! That doesn’t affect the RESP at all—those funds can be used for other educational expenses. Any leftovers are handled according to whatever flexibility the plan offers. We had a client whose daughter earned a full scholarship, and they used the RESP to fund her off-campus and overseas expenses.

Be it entering into a new plan or just getting a better understanding of the one you already have in place, Canadian LIC is here to guide you through every step. Don’t hesitate to reach out with any questions and begin your journey in education savings today!