Opening an RESP

6 steps to opening an RESP

1.  Get social insurance numbers

You will need your social insurance number to open an RESPRESP See Registered Education Savings Plan.+ read full definition. Your child or other beneficiaries will also need social insurance numbers and must be Canadian residents.

2. Shop around

Different RESP providers offer different types of plans with different rules and restrictions. Decide which plan best meets your needs – an individual, family or group plan. Find out who offers the plan and what your choices are.

3. Decide how to invest your savings

Your optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition will depend on the plan offered by your provider. Investments that qualify for RESPs include savings accounts, GICs, Canada Savings Bonds, mutual funds, stocks and bonds.

You may want to open a self-directed RESPSelf-directed RESP An RESP plan where you choose the investments you want to hold. You can choose one type of investment (for example, GICs or mutual funds), or you can mix different types, including GICs, mutual funds, stocks and bonds.+ read full definition. With this type of plan, you can choose more than 1 type of investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition. Ask about plan costs and investment costs before you decide.

Watch this video about how to decide which investments to hold in your RESP.

4. Understand the fees and penalties

Know how much the plan will cost. Are there sales fees or set-up fees, annual fees or penalties for making changes?

5. Read all the information carefully before you sign

Most plans will provide written information about how the plan works, rules, fees and penalties. By law, scholarship planScholarship plan A type of Registered Education Savings Plan (RESP) that pools together the money of many investors. An investment manager invests the money for you, often in lower-risk, fixed-income investments such as bonds and GICs. Enrolment fees are often high and there may be strict rules.+ read full definition dealers must give you a prospectusProspectus A legal document that sets out the full, true and plain facts you need to know about a security. Contains information about the company or mutual fund selling the security, its management, products or services, plans and business risks.+ read full definition, which describes the plan in more detail. Make sure you read and understand all plan documents before you sign the contract.

If you change your mind

For all plans offered by scholarship plan dealers, you have the right to withdraw all of your money within 60 days if you change your mind. After 60 days, you can get your money back, less any fees. Scholarship plan dealers are required to provide a prospectus that includes a short Plan Summary with the information you need. Be sure to read and understand this document.

6. Open the RESP and apply for government grants

Your RESP provider will apply for the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) on your behalf when you open your RESP. If you live in Quebec, Alberta or Saskatchewan, you may also be eligible for a provincial grant.

Key point

You need social insurance numbers for you and your child to open an RESP.

Take action

Shop around before you buy. Different RESP providers and plans have different rules and fees.

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