Investing

Family RESP vs. Multiple Individual RESPs

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Newbie
Feb 9, 2016
21 posts
17 upvotes

Family RESP vs. Multiple Individual RESPs

I have a 2-year old child and another on the way. I previously set up an RESP for the 2-year old and have contributed $7,500 so far to get the max CESG in the first 3 years. The goal will be to at a minimum deposit the $36,000 required to get each child the $7200 CESG match. At the time we set up the account we only had 1 kid but were encouraged by our banker to make it a Family RESP account so we did.
Comparing individual to family plans it seems the only advantage to family plans is they are “easier to manage” and allow you to move non-CESG money between the two beneficiaries (if one does more schooling etc.) but I’m not sure that is necessarily true for the below reasons:

1. “Easier to manage” both plans are run on a CCP style system, more equity when children are younger sliding to more bonds/GICs as they become older. Since the kids are different ages even if I have a family plan I will still essentially be running 2 separate accounts within the plan. I could have some small savings if I notionally slide equity ETFs from older child to younger child and buy GICs with new funds later on (saving a single transaction fee) but that will get very confusing.
2. "Easier to Move money between kids" In a family plan you cannot move the $7,200 CESG between kids and with individual plans you can re-name the beneficiary if things change (no CESG can be re-assigned) so in reality the $7,200 has to be used by each child whether family or group plan and the rest can be used more by one child or the other. – please correct me if I’m wrong.

So, are there benefits to a family plan that I’m missing or would I be better of setting up a new individual plan for the 2nd child when born?
I think it would be easiest and cleanest to allow them each to have their own plan and watch it grow, then when the first starts school its’ clear how much they have to spend and we don’t accidentally spend any money of the 2nd on the 1st and vice versa.

Unrelated questions to parents who have had a plan for withdrawing from the family plan (I realize this is a long ways away).
1. Legally speaking who gets to make the call to withdraw funds; the beneficiary (child) or the subscriber (parent)? Is there anything to stop a child from enrolling in 1 semester of community college and withdrawing their entire RESP account then dropping out?
2. Parents did you make a withdrawal plan with your children as they entered post-secondary? If the child goes to a 4-year program it would seem the initial plan would be to withdrawal 1/4th per year, if by year 3 or 4 they are strongly considering a 2nd degree adjust accordingly but as I understand it you’re better taking the money out while the kid is in school (even if it goes above personal exemption) then having it trapped in the RESP after schooling is complete.
3. Parents who had a group plan did you give children who did more years (or more expensive) schooling more money or did you give each child the same? What is fairer giving each child the same amount or giving the child who spends more or school more dollars – this is not really a financial questions just one I’ve been pondering. I’m leaning towards its “fairest” to invest the same amount for each child and let them spend it (within some guidelines) as they see fit.
21 replies
Deal Addict
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Nov 18, 2007
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Corktown
I preferred the Family Plan to have a single pool of funds. If nothing else, it reduces your re-balancing costs by half.

The idea that the education costs will be equal for each child may not hold true - unless they are twins/triplets/quads enrolled in the same program. With individual plans what happens if one child's costs are greater and runs through their individual plan before they finish? With the Family Plan you have a single pool to fund any case.

If for whatever reason, a child does not go further with schooling, then the EAP amount is returned and all other capital in the Family Plan is available to the other children. No additional paper work or convoluted transfers are necessary.

When it came time to withdraw I reduced the EAP amounts first, when the child's income is lowest. (In later years of schooling, co-op programs, etc., would increase income and possible taxes.)

Be sure to name both spouses as subscribers to the Family Plan to allow future transfer to one or both RRSPs if plan is to be collapsed without being used for schooling.
Sr. Member
Jan 14, 2010
701 posts
249 upvotes
Central Ontario
I prefer family plan for similar reasons to @fastlayne. If you're lucky enough to have 4y x 2kids worth of capital and growth in your account, I could kind of see the worry about creating the right asset mix depending on year of withdrawal, but at 2y between your kids, there's not really much difference there.

I'm working into my first withdrawal year soon, and even though we have maxed out throughout the years, we do not have 8y worth of costs accumulated. I know I used a more conservative asset allocation for the RESP than my retirement/investment accounts, due to the shorter/defined timeframe and the sense that (IMO) this wasn't really my money to risk. So, I will likely use up all the funds in our family account within 3-4 y, if all goes according to plan with sibling spacing. I'll be out of money, so why divvy it up into 2 (or more) accounts?

Schools and programs also cost very different amounts, and are of different lengths (eg: compare 4y engineering degree vs. 6y concurrent ed degree vs. 3y college nursing costs = vastly different); same with location expenses (live at home or away; transportation costs for cross-country schools). I think equity (vs. equality) is the goal.

As for your other questions, there is a limit to how much you can withdraw in the first 13w. There are strategies to make sure you withdraw all the EAPs first, in case there happens to be leftover contributions. Like @fastlayne I plan to try to withdraw strategically for tax purposes depending on kids' income (it might make sense to withdraw a lot the first semester, especially if child only has a summer (or no) job and if they find a great 4m summer job after first year uni which might push them into tax paying bracket).

Here are some helpful links I look at a lot: Moneysmart Blog and Globe article.

You are doing the best thing right now, which is getting those babies' SINs as early as possible and chucking $$ in the account. We are in such a better position even with conservative growth than if we'd never started saving.
Deal Expert
Aug 2, 2001
18945 posts
10527 upvotes
Lol your story is similar to ours. In fact, as if it describes our situation. We were encouraged at the bank to setup a family RESP but when I looked into it further the only benefit is in the management of it and any costs associated with buying/selling.

For our second we will just setup an individual RESP. My reasoning is that I want each child to have their own pool of money to withdraw from. I'm not concerned with the fees - by contributing on a regular basis it's likely the yearly contribution could mostly "rebalance" the portfolio except in extreme swings.


My belief is that your understanding of RESPs is correct.
Newbie
Feb 9, 2016
21 posts
17 upvotes
fastlayne wrote: I preferred the Family Plan to have a single pool of funds. If nothing else, it reduces your re-balancing costs by half.

The idea that the education costs will be equal for each child may not hold true - unless they are twins/triplets/quads enrolled in the same program. With individual plans what happens if one child's costs are greater and runs through their individual plan before they finish? With the Family Plan you have a single pool to fund any case.
.
That was my question to parents who have gone through the withdrawal phase. If one kid goes to med school and the other does an undergrad or trade school should the med school student get more money? Is it fair to say to each child "We invested $35k, here is the total the rest is up to you?" or to say "We will pay x% of your costs". If you pick the first option the individual plans have a simplicity to them, if you pick the second option then the family plan allows you to pull more money out for the med school kid easily.
cocodc wrote: I prefer family plan for similar reasons to @fastlayne. If you're lucky enough to have 4y x 2kids worth of capital and growth in your account, I could kind of see the worry about creating the right asset mix depending on year of withdrawal, but at 2y between your kids, there's not really much difference there.

I'm working into my first withdrawal year soon, and even though we have maxed out throughout the years, we do not have 8y worth of costs accumulated. I know I used a more conservative asset allocation for the RESP than my retirement/investment accounts, due to the shorter/defined timeframe and the sense that (IMO) this wasn't really my money to risk. So, I will likely use up all the funds in our family account within 3-4 y, if all goes according to plan with sibling spacing. I'll be out of money, so why divvy it up into 2 (or more) accounts?

Schools and programs also cost very different amounts, and are of different lengths (eg: compare 4y engineering degree vs. 6y concurrent ed degree vs. 3y college nursing costs = vastly different); same with location expenses (live at home or away; transportation costs for cross-country schools). I think equity (vs. equality) is the goal..
It sounds like you have 2 kids with a family plan and know that the plan will not cover the full cost of each kid getting a 4 year degree (let me know if I read that wrong). If you do not mind me asking what is your planned approach to dividing the money between the kids are you setting aside a certain amount for the older child or just playing it by ear?

Again I do not think their is a right answer to these questions and am looking for input from other parents on how they decided to approach RESP withdrawals and fairness.
Deal Addict
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Aug 1, 2007
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Another plus to a family resp is that there's only one transfer out fee if you ever change brokers.
Deal Expert
Aug 2, 2001
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YegGuy wrote: That was my question to parents who have gone through the withdrawal phase. If one kid goes to med school and the other does an undergrad or trade school should the med school student get more money? Is it fair to say to each child "We invested $35k, here is the total the rest is up to you?" or to say "We will pay x% of your costs". If you pick the first option the individual plans have a simplicity to them, if you pick the second option then the family plan allows you to pull more money out for the med school kid easily.
It's my understanding that even with individual plans you can easily transfer money between children. I have not gone through the process but assume it's under 1 hour of paperwork to do.
Deal Fanatic
Feb 15, 2006
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Toronto
TrevorK wrote: It's my understanding that even with individual plans you can easily transfer money between children. I have not gone through the process but assume it's under 1 hour of paperwork to do.
Yes you can transfer between kids. As for how long the paperwork takes, it depends on how knowledgeable the person you are dealing with at the financial institution. Some are knowledgeable and can do things easily, while some others can be asking their colleagues, asking questions, do incomplete work and get you to go back with multiple trips, bringing more documents...
Deal Fanatic
Jul 1, 2007
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To clarify something here that some posters might not be aware of: there are two types of Family RESPs:

1) At a bank branch they'll generally open a separate account for each kid and say that they're "linked", so that any kid can draw from their sibling's account down the road.

2) At a discount or full service brokerage a Family RESP is usually one big pooled account. Once the money is in there, it no longer is assigned to one kid or another. This is where the real benefit is in terms of managing the money, because with the greater pool of money you can better plan out the expenditures down the road. For example, when you have two kids that are 5 years apart in age, you can already be building a GIC/bond ladder for the older one when they're teenager, but still have a bigger pool of money to invest. When the older one is in university you can even do something like contributing the younger one's $2500, getting the grant, then taking that money right back out as an Education Assistance Payment for the older one. Stuff like that. None of it really applies to the bank branch type of Family RESP.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Sr. Member
Dec 27, 2017
738 posts
426 upvotes
Sorry to bump an old thread, but it seems like the topic is relevant.

Does it make sense to open a Family RESP even if we'll have only one child? Does it make any difference?
It sounds like a Family RESP always leaves an option to add a second child later if that so happens without paperwork and potential fees.
Jr. Member
Dec 15, 2005
132 posts
25 upvotes
Toronto
eljay0 wrote: Sorry to bump an old thread, but it seems like the topic is relevant.

Does it make sense to open a Family RESP even if we'll have only one child? Does it make any difference?
It sounds like a Family RESP always leaves an option to add a second child later if that so happens without paperwork and potential fees.
Yes you can open a family RESP and update it when next bundle of joy emerges from cocoon. I prefer family option because the plan can stay open as long youngest beneficiary is 35 and cash out when 36.
Sr. Member
Dec 27, 2017
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POLTROJAN wrote: Yes you can open a family RESP and update it when next bundle of joy emerges from cocoon. I prefer family option because the plan can stay open as long youngest beneficiary is 35 and cash out when 36.
Thanks. I was just wondering if there are any caveats if a family RESP only has one child if a second one never happens to arrive.
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Nov 26, 2011
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Can someone confirm that if I have 3 individual RESP for three of my children can the RESP be transferred to the other child if a child decides not to go to post-secondary? Will the CESG be transferred to the other child as well? I am debating between single and family RESP and prefer single due to how easy managing it would be. Older child will have more fixed income vs youngest will have more equities.
Jr. Member
Dec 15, 2005
132 posts
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Toronto
masoud100 wrote: Can someone confirm that if I have 3 individual RESP for three of my children can the RESP be transferred to the other child if a child decides not to go to post-secondary? Will the CESG be transferred to the other child as well? I am debating between single and family RESP and prefer single due to how easy managing it would be. Older child will have more fixed income vs youngest will have more equities.
You can transfer the money but not CESG, each child has a designated grant from government of $7200 total, not more. Another important fact is, you can not contribute more than $50,000 lifetime to child's RESP account. Maximum contribution per RESP account is; personal $50,000 and grant is $7,200.

With the family RESP, you have a pooled fund. You can designated within the fund how the money is distributed, for example 33% bonds/GIC/Fixed Income and 67% as Equities. You can mix within the Family RESP, you're not restricted to a single fund as a whole.

Another important note, even if the child doesn't do the secondary post education (college or university or trade school), keep the RESP account open with CESG or a smaller amount, until they turn 36, the account MUST be closed and you can allocate that money to yourself as cash with 20% tax penalty on payout or transfer to personal RRSP.
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Oct 14, 2001
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What about using multiple Family RESP ?
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Nov 26, 2011
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POLTROJAN wrote: You can transfer the money but not CESG, each child has a designated grant from government of $7200 total, not more. Another important fact is, you can not contribute more than $50,000 lifetime to child's RESP account. Maximum contribution per RESP account is; personal $50,000 and grant is $7,200.

With the family RESP, you have a pooled fund. You can designated within the fund how the money is distributed, for example 33% bonds/GIC/Fixed Income and 67% as Equities. You can mix within the Family RESP, you're not restricted to a single fund as a whole.

Another important note, even if the child doesn't do the secondary post education (college or university or trade school), keep the RESP account open with CESG or a smaller amount, until they turn 36, the account MUST be closed and you can allocate that money to yourself as cash with 20% tax penalty on payout or transfer to personal RRSP.
I called the Canada Education Savings Program. The representative clearly stated that if I had individual RESP for each of my children I would be able to transfer the money including the grants (not the Canada Learning Bond) to another child with another individual RESP. Only caveat is that the each child can only use maximum $7200 in grant money. This is a quote I found online from getsmartaboutmoney.ca, "TRANSFERRING RESP MONEY AMONG YOUR CHILDREN: You can transfer money between individual RESPs for siblings without any tax
penalties. And, you do not have to repay any Canada Education Savings Grants (CESGs). This applies to transfers that take place after 2010. The child who benefits must have been under 21 when the plan was opened."

Also on another website online, it states "Individual Plan RESP - Individual plans can only have one named beneficiary. The beneficiary can be any individual named by the subscriber including the subscriber (Individuals can open RESPs for themselves). There are no age restrictions on this type of account, however CESG and other grants can only be paid to beneficiaries under the age of 18. The beneficiary on the account can be replaced by anyone else but if the new beneficiary is not blood related to the subscriber then any CESG (grants) have to be repaid. The last contribution date is the end of the 21st year of plan’s existence. Plan has to be collapsed during it’s 36th year.
Jr. Member
Dec 15, 2005
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Toronto
masoud100 wrote: I called the Canada Education Savings Program. The representative clearly stated that if I had individual RESP for each of my children I would be able to transfer the money including the grants (not the Canada Learning Bond) to another child with another individual RESP. Only caveat is that the each child can only use maximum $7200 in grant money. This is a quote I found online from getsmartaboutmoney.ca, "TRANSFERRING RESP MONEY AMONG YOUR CHILDREN: You can transfer money between individual RESPs for siblings without any tax
penalties. And, you do not have to repay any Canada Education Savings Grants (CESGs). This applies to transfers that take place after 2010. The child who benefits must have been under 21 when the plan was opened."

Also on another website online, it states "Individual Plan RESP - Individual plans can only have one named beneficiary. The beneficiary can be any individual named by the subscriber including the subscriber (Individuals can open RESPs for themselves). There are no age restrictions on this type of account, however CESG and other grants can only be paid to beneficiaries under the age of 18. The beneficiary on the account can be replaced by anyone else but if the new beneficiary is not blood related to the subscriber then any CESG (grants) have to be repaid. The last contribution date is the end of the 21st year of plan’s existence. Plan has to be collapsed during it’s 36th year.
Yes, you can transfer the CESG, but the CESG can not be used by the other child even though its in one plan. you can have multiple CESG in a single plan, but they are designated per person. another child can not use another child's CESG.

did he say that the beneficiary of the plan must include both childs names? it should if you want to transfer over the CESG.
Last edited by guest656788 on Jul 21st, 2019 5:16 pm, edited 1 time in total.
Jr. Member
Dec 15, 2005
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Toronto
Thanh wrote: What about using multiple Family RESP ?
uh you can with different institutions but that would defeat its purpose. the whole point of Family RESP is to keep multiple children in a SINGLE plan.
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Nov 26, 2011
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POLTROJAN wrote: Yes, you can transfer the CESG, but the CESG can not be used by the other child even though its in one plan. you can have multiple CESG in a single plan, but they are designated per person. another child can not use another child's CESG.

did he say that the beneficiary of the plan must include both childs names? it should if you want to transfer over the CESG.
Well I clearly gave the agent this specific scenerio - I have 4 children with 4 different individual RESP. If child 2 does not decide to go to Post-Secondary can I transfer the RESP from child 2 to child 3. He said yes. I then said what about the CESG and he said yes and as long as the other child does not use more than $7200 its okay. Everywhere I read online most places mention that there really is no difference between individual RESP vs Family RESP except for fees, etc which does not apply to me with Questrade.

In a Family RESP when you make a contribution you have to specify who the contribution is for. Based on that the government will give a maximum $2500 grant for that child and not more. So if a Family RESP grants can be used by anyone regardless of who the government issued the grant to then I don't see why it would be any different for multiple individual RESP's as long as they are blood relatives (siblings).
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Aug 29, 2018
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Toronto
masoud100 wrote: Well I clearly gave the agent this specific scenerio - I have 4 children with 4 different individual RESP. If child 2 does not decide to go to Post-Secondary can I transfer the RESP from child 2 to child 3. He said yes. I then said what about the CESG and he said yes and as long as the other child does not use more than $7200 its okay. Everywhere I read online most places mention that there really is no difference between individual RESP vs Family RESP except for fees, etc which does not apply to me with Questrade.

In a Family RESP when you make a contribution you have to specify who the contribution is for. Based on that the government will give a maximum $2500 grant for that child and not more. So if a Family RESP grants can be used by anyone regardless of who the government issued the grant to then I don't see why it would be any different for multiple individual RESP's as long as they are blood relatives (siblings).
You are 100% correct. CESG can be transferred to another beneficiary so as long as the beneficiary has not exceeded their life time maximum of $7200.

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