4 Types of Registered Education Savings Plans and Trusts

Canadian parents of future students can take advantage of one of a number of registered plans for education. A heritage education funds RESP makes it possible for you to send your child to university in the future and realize his or her goals for a higher education. Following are some of the types of plans that you can consider.

1. Individual Plans
These types of Registered Education Savings Plans, or RESPs, make it possible for a parent to take care of one beneficiary. Anyone can open this type of plan and make contributions. You do not even need to make a minimum deposit. If the beneficiary for the plan does not continue with his or her education after high school, you can name another beneficiary for the plan.

This plan is advantageous as you can decide just how much money you want to contribute and when. You have a lifetime limit of contributing of $50,000 per each beneficiary. This type of plan is flexible and you can easily understand the rules. Therefore, it is the ideal vehicle for anyone who wishes to save for his or her child’s or grandchild’s education. You will like the ease with which you can open up a plan and contribute to it immediately.

2. Family Plans
This type of plan is indicated for people who have more than one beneficiary or more than one child who will use the proceeds for university study. The beneficiary must be related to the person who opens a Registered Education Savings Plan of this type. The children who you name as beneficiaries must be under the age of 21 when you sign up for the plan.

You usually do not need to make any minimum deposit when you open a family plan. You can decide how much money to place into the savings plan and you have a lifetime cap of $50,000 for each named child or beneficiary. If you have this type of RESP with a financial institution as heritage Resp, you can decide just how much to add in contributions. If you have the plan with a scholarship plan dealer, the money is automatically invested for you instead.

Therefore, if you want more flexibility in this regard, it is better to open up a family RESP with a financial institution or a bank. The same is true of the aforementioned single or individual plan. With this type of plan, you can decide how to divide the monies amongst the beneficiaries. If one of the children does not continue with a higher education, you can still use the remaining money for your other beneficiaries.


3. Group Plans
Group plans are different in format than individual and family plans. They have their own special rules. They also feature higher fees and more restrictions. For example, you can contribute to this type of RESP on a set schedule. You can contribute up to $50,000, just as you do in other heritage RESP plans. The money that you add is pooled with the contributions of the plan’s other investors. All investment decisions are made by the plan administrator.

4. Informal Trust Accounts: An Alternative
You can also plan for your child’s education by taking an alternative route by using an informal trust account to save for your child’s education. You have a number of options in this respect so you need to speak to a provider.