Page 69 - A Canuck's Guide to Financial Literacy 2020

69

The qualifying net income of the child's family for a year will generate be the same income
used to determine eligibility for the Canada Child Tax Benefit (CCTB).

Types of RESPs

There are generally two types of RESPs

Single Beneficiary RESP

Single beneficiary RESPs mean that only one beneficiary exist and the subscriber
that opened this account does not have to be related to the beneficiary. In rare
circumstances, the beneficiary and the subscriber can the same person. This means
that the individual is saving up for their own education

Family RESPs

Family RESPs allow the subscriber to name more than one beneficiary. Each
beneficiary must be related by blood or adoption to the other beneficiaries. The
subscriber must be a parent, grandparent, sister, or brother of the beneficiary. The
benefit of having more than one beneficiary is flexibility which means that if one child
doesn't go to school, the other child can take advantage of the EAPs.

Rules of Withdrawal

In order for a beneficiary to withdraw from their RESP, the student must either

• Be enrolled full time in a qualifying educational program at a post secondary
institution, including distance education courses
• The student has reached the age of 16 and is enrolled part time in a specified
educational program

Qualifying educational programs include programs taken in university, college, CEGEP,
apprenticeships or trade schools.

Limits on Withdrawals

For RESPs opened after 1998, there is a limit in regards to how much EAP a student may
withdraw

• For student enrolled in full time education - $5,000 for the first 13 consecutive weeks
of school. After 13 weeks have passed, there is no limit on the amount of EAP that
the student may redeem. If the student decides to take a 12-month break from
school, then they must abide to the $5000 rule again