Wow! I really didn't expect this choice to be so tricky! When I first looked at the Registered Education Savings Plan (RESP), I thought a plan was just a plan. Turns out, there are two major ways to set this up, and picking the wrong one might make things complicated later. I've spent the last week digging into the math of Individual versus Family accounts!
View My DecisionThis is for just one person. Guess what? You don't even have to be related to them! I found out I could open one for a neighbor's kid if I really wanted to. It’s simple because the money is tied to one specific future student, and there are no rules about age limits for the subscriber.
If you only have one child, this seems like the cleanest way to track contribution rules without getting mixed up.
Wait, this is cool! In a family plan, you can have multiple children under one account. They must be related to you by blood or adoption. The big win here is flexibility. If one child decides not to go to university, the other siblings can often use the remaining funds!
It makes managing the CESG grants slightly more complex, but the shared pool of money is a huge safety net.
I checked a few places in Ottawa and found that most big banks and credit unions offer both types. Oh! But I noticed some smaller providers have higher fees for family plans because of the extra tracking required for multiple beneficiaries. You should definitely check the CRA links to see the full list of authorized providers.
I was so worried about making a mistake! Representing my findings here was harder than I thought.
One thing I learned is that with Family Plans, there's an age limit. All beneficiaries must be under 21 when they are added to the plan. Representing the age gap between my kids was key here. If your children are ten years apart, the oldest might finish school while the youngest is just starting, which affects how you handle the withdrawal process.
Individual plans are safer if you aren't the parent. If you're a grandparent or an aunt, the Individual plan keeps things very clear for the tax man. I didn't realize that over-contributing is much easier to do in a Family plan if you aren't careful with your math!
After reading all the brochures, I decided to go with the Family Plan! Since I have two kids and they are quite close in age, the ability to share the grant money if one of them takes a shorter college program is just too good to pass up.
It feels like putting all my eggs in one very sturdy basket. I’ll just have to be extra careful about tracking the $50,000 lifetime limit for each child so I don't get hit with any penalties.