The RESP is an effective savings tool to finance your children's or grandchildren's post-secondary education, but it is often misunderstood. Here is the truth about some common myths:
Myth #1: You will lose your investment if your child does not pursue post-secondary education.
False! Individual and family plans offer you more freedom than some group plans. You can choose another beneficiary if your child gives up post-secondary studies. For example, you can increase the value of your younger child's RESP by transferring funds from your eldest, respecting certain relationship rules. If you have no other dependent children, you have other options. You can withdraw your contributions or transfer investment income to your RRSP or your spouse's, depending on your contribution room. Only grants must be repaid to governments. Furthermore, you have 35 years after opening the RESP to withdraw accumulated sums, leaving time for your children or grandchildren to change their minds and start post-secondary studies later.
Myth #2: RESPs only serve to pay university tuition fees.
False! RESPs can cover CEGEP fees in Quebec, costs of many vocational training programs, and even international studies. RESPs can also pay other education-related expenses (school supplies, transport, or rent, etc.). The beneficiary (the child) can use the funds as they wish, provided they are enrolled in post-secondary training, whether they pass or not.
Myth #3: It is too late to open an RESP if my child is already grown.
False! It is ideal to invest regularly in your children's RESP to maximize government grants, but you can also start later. You can recover unused grants from previous years, thanks to an RESP loan. Consult an advisor to take advantage of these opportunities.
Myth #4: If I am not the child's parent, I cannot invest in an RESP for them.
False! In an individual RESP, the subscriber can be anyone, whether related to the beneficiary (the child) or not. For example, a parent and a grandparent can independently subscribe to an RESP for the same beneficiary while respecting contribution limits to avoid tax penalties.
Open an RESP account
