A Registered Education Savings Plan (RESP) is an account used to save for post-secondary education. The Government of Canada also offers incentives to maximize savings for post-secondary education. The recipient of the grants offered is referred to as the “beneficiary”.

Types of RESP Accounts

There are 2 types of RESP accounts that one can open:

1. Individual: This plan is limited to a single beneficiary. The account can be opened by anyone related to the beneficiary or not.
   • One can even open an individual RESP for themselves to invest in their own post-secondary education as long as they are 18 and older. However, adults are not eligible for the Basic Canada Education Savings Grants (CESG).
     
     
2. Family: This plan is for one or multiple beneficiaries who are related to the primary account holder. Beneficiaries can be added in the lifetime of the account.
   
   • Family RESPs can only:
     • Be opened by parents, grandparents, or siblings
     • Have siblings as beneficiaries

RESP plans can be opened with a co-owner who must be the spouse or common-law partner of the primary account holder. Learn more on the Government of Canada page.

Benefits of Investing in a RESP Account

There is no annual contribution limit to a RESP account, although there is a lifetime contribution limit of CAD $50,000 per beneficiary across all actively open accounts.

Contributions to RESP accounts can be made for up to 31 years, and the plan can remain open for a maximum of 36 years. 

The Government of Canada offers the following grants:

1. CESG: the Government contributes up to $500 to an RESP account per year. The lifetime maximum contribution of the grant is CAD $7,200 per child until the calendar year they turn 17.
2. Additional CESG: this is an additional grant that is offered based on the adjusted net family income of the beneficiary.
3. Canada Learning Bond (CLB): this is an additional grant that is available to beneficiaries from low-income families born in 2004 or later. The Government provides an initial $500 for the first year the child is eligible, plus $100 for each additional year of eligibility, up to 15 years for a maximum of $2,000.

Please note that the province of British Columbia offers an additional grant for beneficiaries who are residents of British Columbia with a Custodial Parent/Legal Guardian who is also a resident of British Columbia at the time of application. Please contact our support team for more information if you qualify for the BC grant.

Limitations of Investing in an RESP Account

If the account holder exceeds the maximum lifetime contribution room of CAD $50,000, all excess contributions over CAD $50,000 are subject to a 1% monthly charge until they are withdrawn.

If the account holder makes an early withdrawal, the funds are subject to a 20% penalty fee and income tax if there were any earnings while the funds were invested.

If the account funds are not utilized within the 36 years since the account was created, the Government will receive its portion of annual contributions back and can tax any gains.

Eligibility

Anyone 18 years or older can open an RESP account for a beneficiary who:

1. Has a Social Insurance Number (SIN)
2. Is a resident of Canada

Opening a RESP Account

Below are the steps to create a RESP account:

1. Initiate the RESP account creation on the web or mobile app
2. Select the RESP account type
   • Add beneficiary information: name, address, date of birth, gender, SIN
   • Add primary caregiver (PCG) information: name, address, email, SIN
     • Only where the beneficiary is less than 21 years and the account holder is not the primary caregiver
     • The PCG should sign a form providing consent for the RESP account creation and sharing of data to determine if the beneficiary qualifies for additional grants
     • The PCG is the person primarily responsible for the care and upbringing of a child. They receive the Canada Child Benefit (CCB) payment.
   • Legal guardian information: name, address, email
     • Only where the beneficiary is less than 21 years and the account holder is not the legal guardian
     • The legal guardian should sign a form providing consent for the RESP account creation and sharing of beneficiary information
3. Confirm consent for Manzil to apply for grants in the account
4. Submit for review

Once clients have opened a RESP account:

• All custodian fees apply, regardless of the account type
• There are no RESP fees for withdrawals

Account holders can update the beneficiaries on their RESP account to another child without any penalty if the child is under 21 years old.

Contributions to an RESP

Funds in an RESP account can be categorized into two types:

1. Post-Secondary Education (PSE): contributions made by the primary account holder, and co-owner where applicable, to the RESP account
   • This can be withdrawn by the account holder
2. Education Assistance Payment (EAP): investment earnings on the RESP and the government grant portions of the RESP
   • This can only be paid to the beneficiary when they enrol into a post-secondary institution

Clients do not have to make minimum contributions or set up regular payments once their account is set up. However, to access the basic CESG, the primary account holder should make a contribution.Your available RESP contribution room can be found on your Tax Assessment, or online, throughMyAccount with the CRA.

Account holders will be able to review the contributions of their RESP account in their "Statements" each month as well as on the transaction history on the web or mobile app.

Withdrawal Policies

Only the account holder(s) of the RESP account can make withdrawals. Upon withdrawal, funds that were contributed by the account holder (PSE) can either go to the beneficiary and/or account holder. However, funds that were received as grants or gained as income can only go to the beneficiary. 

If the account holder wishes to withdraw their funds early, there will be a 20% income tax penalty on any earnings taken but not spent on post-secondary education.

When Beneficiaries go to School

If the RESP account beneficiary decides to go to an eligible educational institution full-time, the account holder can begin withdrawing and contributing to their education. Account holders can do one-time withdrawals, or set up recurring withdrawals.

If the beneficiary decides to go to an eligible educational institution part-time, they can receive up to $2,500 per 13-week semester if they complete at least 12 hours of coursework per month. Account holders can do one-time withdrawals, or set up recurring withdrawals.

Unused Funds

If the RESP account beneficiary does not start or complete their post-secondary education, the RESP account holder can:

1. Transfer the funds to another RESP or let other beneficiaries use the contributions in a family RESP plan
2. Transfer the funds to an RRSP account depending on the contribution room
• This excludes the grants from the government 
• The RESP account must have been active for 10 years, and the beneficiary(ies) must be over 21 years of age 
3. Withdraw the funds as cash 
• This excludes the grants from the government 
• Subject to tax on earnings only

RESP Account Transfers

RESP transfers can happen under the following circumstances:

1. The relinquishing and receiving RESPs have a common beneficiary
2. A beneficiary named in the relinquishing RESP is a brother or sister of a beneficiary in the receiving RESP, and:
• The receiving RESP is a family RESP; or
• The receiving RESP is an individual RESP and the beneficiary named in the receiving RESP was under 21 years of age when the receiving RESP was entered into.
3. Neither of the above. In this scenario, government grants would have to be repaid.

There is no cost to transfer an RESP account from another institution to Manzil, however, the relinquishing institution may charge transfer fees.

Please review this form for RESP transfers.

Frequently Asked Questions

1. Can I open an RESP account anytime?
   Yes, you can open an RESP account and start contributing to it anytime.
   
   
2. When is the best time to open an RESP account?
   When it comes to choosing the best time to open a RESP account - and other investment accounts - it is completely up to the account holder. For other questions you may have, we invite you to reach out to the Manzil support team to schedule a time to speak with one of our registered Portfolio Managers.
   
   
3. What types of post-secondary education do RESP accounts cover?
   A post-secondary educational institution for the purposes of an EAP can be a university, college or other educational institution in Canada or outside where instruction or work might include all forms of direct instruction, such as lectures, practical training, laboratory work, or time spent on research for a thesis. Learn more here.
   
   
4. How do I transfer RESP plans in my profile?
   This will be done manually for now. Please contact the Manzil support team for any RESP transfer requests. Account holders should fill in this form for any RESP transfers to be made.
   
   
5. Will I get notified if I over contribute to a RESP account? If yes, how will I get notified?
   No, this is because one can open as many RESP accounts in different institutions hence less visibility on the total contributions.
   
   
6. Do I need to provide documentation to prove that the beneficiary started their education before they can start receiving funds from the RESP account?
   Yes, proof of post-secondary enrolment is required before you can make any withdrawals. For now, please contact the Manzil support team to make a withdrawal from the RESP account.
   
   
7. What type of Government grants can I receive in addition to my own RESP account contributions?
   The Canada Education Savings Grants (CESG) is offered for contributions made. The Additional CESG and CLB are dependent on the adjusted net family income of the beneficiary and the income of the primary caregiver.
   
   
8. How can I close an RESP account?
   To close an RESP account, you need to withdraw all funds from the account (or transfer funds to another institution), cancel any scheduled transfers, and reach out to the Manzil support team to initiate the process.
   
   
9. How can I add a joint user to my RESP account?
   To add a joint user, you will need to open a separate account. You can reach out to the Manzil support team for more information on initiating the process.