There are two types of RESPs:
- Individual - One person is the beneficiary and he/she does not have to be related to the subscriber
- Family - There can be more than one beneficiary as long as they are all under 21 and related to the subscriber by blood or adoption.
In order to receive the additional grants or bonds the Family RESP must have only beneficiaries that are all siblings of each other.
Contributions are not tax-deductible and while you can take out your contributions, tax-free any time (withdrawal may have an effect on grants), the growth/income portion of the RESP can only be withdrawn as an EAP if the beneficiary is actually enrolled in a qualifying education program or within six months of the last date enrolled. If the beneficiary is not enrolled, grants will be returned to the government.
Contributions can be made each year for the first 31 years of the plan (or to the age 31 for beneficiaries of Family RESPs). The lifetime limit per beneficiary has increased to $50,000; while there is no longer an annual RESP contribution limit, there are maximum annual payments from the grant and incentive programs.
The annual maximum for Basic CESG is $1,000; $500 will be paid on the first $2,500 and up to $500 will be paid on the next $2,500 depending on the CESG carry-forward room available. Additional contribution amounts above $5,000 in the same calendar year will not receive a CESG. The maximum lifetime CESG Grant per beneficiary is $7,200. In order to be eligible for the Basic CESG, the beneficiary must be a Canadian resident at the time of contribution and the contributions are made before the calendar year the beneficiary turns 18 years old, with special conditions in the year the beneficiary is 16 or 17.
An RESP matures in 35 years If money remains in the plan, you may request that the principal amount of contributions be returned to you, the beneficiary, or be transferred to another type of account. Any remaining grants will be returned to the government. And provided certain conditions are met, you can transfer up to $50,000 of accumulated RESP income to your RRSP.