FAQs about RESP Subscribers

By: Sound Choices • October 13, 2020 • Personal Finance

A Registered Education Savings Plan (RESP) is a tax-sheltered plan registered with the Canada Revenue Agency (CRA) that can help families save for their children’s post-secondary education.

Contributions made to an RESP grow tax free until the funds are withdrawn to pay when the beneficiary is registered at a qualifying educational program.

Q: Who is the subscriber to an RESP?

A: The subscriber is the person who opens an RESP on behalf of the beneficiary (the student who will use the funds in the RESP to pay for their post-secondary education).

Q: Who can be a subscriber to an AGF RESP?

A: It depends on the type of RESP.

  • For Family RESPs: the subscriber must be related by blood or adoption to all beneficiaries in the account (i.e. parent, grand-parent or sibling).
  • For Individual RESPs: the subscriber can be anyone, even the beneficiary. The AGF Registered Education Savings Plan permits spouses to be joint subscribers. In cases where a beneficiary has a public primary caregiver, the subscriber can be the agency.

NOTE: Spouses can be joint subscribers on both types of plans. A public primary caregiver cannot open a family plan.

Q: Can a subscriber transfer from one RESP to another RESP?

A: Subject to the terms of the plan, partial or full transfers are permitted under the Income Tax Act. The transfer of an amount from an RESP to another RESP can be made without resulting in any penalty tax in two cases:

  1. There is a common beneficiary under the originating plan and the receiving plan; or

  2. A beneficiary under the receiving plan is under 21 years of age, and is a brother or sister of the beneficiary under the originating plan.

If the originating plan was opened earlier than the receiving plan, this earlier date will become the new effective plan open date of the receiving plan.

Special conditions apply for transfers of grant and bond monies.

Q: What happens on the death of a subscriber?

A: A subscriber can provide in their will, for their estate to continue the RESP, which would allow the beneficiary to receive payments from the plan while attending post-secondary school.

The subscriber can also name another individual in his/her will, as an alternate subscriber. The alternate subscriber would take on responsibility for the RESP and can name new beneficiaries, etc. after death of the original subscriber. 

Q: What happens when subscribers divorce?

A: Joint subscribers may remain joint subscribers notwithstanding their divorce. Individuals may remain individual subscribers. One spouse may acquire the other subscriber’s rights under a court order and become the new subscriber. If the subscriber remarries, the new spouse can become a joint subscriber.

For more information on RESPs, visit AGF.com/RESP or contact your financial advisor.

The contents of this Web site are provided for informational and educational purposes, and are not intended to provide specific individual advice including, without limitation, investment, financial, legal, accounting or tax. Please consult with your own professional advisor on your particular circumstances.

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