RESP Questions

Preparing for life after work. RRSPs, RRIFs, TFSAs, annuities and meeting future financial and psychological needs.
tedster
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Re: RESP Questions

Post by tedster »

My grand daughter is now 17 and will be 17 when she enters University. She will be 18 in November. (IIRC I was 17 when I enrolled into university and turned 18 once enrolled) I have no idea how many are like that. If you do not agree with Mr Holman's book, take it up with him and leave me alone. I simply copied it out. He appears to have fairly reasonable qualifications.
In my mind at least, "an extra large contribution" can be interpreted as more than $5,000, in light of the fact that the overall maximum RESP contribution is $50,000.
I suppose as the ultimate arbiter of every thing, that makes it okay? IMHO $5,000 is a significant sum of money. Anyhow, I do not have an RESP to manage.
That's not correct. The "other" parent can make a contribution at any time and become the subscriber of the RESP. One day later, he / she can clean it up.
I suppose in your opinion any ex, can simply access the other ex's RESP bank account to withdraw funds by simply making a contribution. Now if it were my bank account RESP or my on-line brokerage RESP account, which I opened and to which I had the access and trading codes, if the bank gave access to anyone, much less an "ex" without my authority, I would assume that would be a violation of their responsibility to me. Of course, I bow to your superior knowledge when you say that it can indeed happen.
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adrian2
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Re: RESP Questions

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tedster wrote:My grand daughter is now 17 and will be 17 when she enters University. She will be 18 in November. (IIRC I was 17 when I enrolled into university and turned 18 once enrolled) I have no idea how many are like that. If you do not agree with Mr Holman's book, take it up with him and leave me alone. I simply copied it out. He appears to have fairly reasonable qualifications.
Then read it again: the advice in the book is not applicable to your grand daughter.
The book wrote:Your child turned 17 this year and just started University.
Read it once more, slowly.
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Re: RESP Questions

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I think you have a serious problem. You do not seem to understand. I mentioned my grand daughter's age because you said that very few people would be 17 when they enter university and be 18 before the 31st of December. Frankly I do not give a damn about the RESP as I do not contribute to any. Then you attacked me because I said I had "hearsay" about the one shot 20% return as mentioned by Mike Holman. Instead of saying that this is feasible but... you attacked me again saying he was incorrect. I only mentioned it because as you said very few people know about it. Then you attacked me because according to you $5,000 is not a serious contribution. Really, if you have a problem with me, see a shrink. I mentioned this so that people could check it out for themselves, which is why I said "hearsay". If some of the posters on this thread can benefit from Mike Holman, then I am happy that I made the suggestion. lastly, you attacked me about my suggestion that parents each open a separate RESP per parent per child and said that the "ex" could simply make a contribution and clean (sic) it out. I asked you a question and you have conveniently not commented. I would again ask you to be a little positive rather than try to find fault with me. I have enough of my own without you adding to them.
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Re: RESP Questions

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tedster wrote:I think you have a serious problem. You do not seem to understand. I mentioned my grand daughter's age because you said that very few people would be 17 when they enter university and be 18 before the 31st of December.
The quoted passage is saying: "your child turned 17 this year and just started University". Your grand daughter will be 17 when she starts university but she turned 17 last year, not this year. I've stated my opinion that very few people would be in that situation, i.e., 17 when they enter university and still 17 by the end of that year.
tedster wrote:Then you attacked me because I said I had "hearsay" about the one shot 20% return as mentioned by Mike Holman.
There was no attack.
tedster wrote:you attacked me again saying he was incorrect.
I did not say that.
tedster wrote:Then you attacked me because according to you $5,000 is not a serious contribution.
I did not say that, read it again.
tedster wrote:Really, if you have a problem with me, see a shrink.
Who's attacking whom?
tedster wrote:lastly, you attacked me about my suggestion that parents each open a separate RESP per parent per child and said that the "ex" could simply make a contribution and clean (sic) it out. I asked you a question and you have conveniently not commented.
I distinctly remember reading about that possibility. I'm sorry I have not filed that article to have it ready for you whenever you doubt my memory. I've never attacked you, just pointed out there is much more information in finiki and your quotes from a book you've just read do not add anything new.
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Re: RESP Questions

Post by tedster »

It seems to me that you are a man looking for hairs to split. Instead of applying your knowledge on RESPs to point out that indeed a "one time" larger than usual contribution can be made to generate a 20% increase, you try to find fault with me. In fact My grand daughter was in fact 17 when she was accepted into University and will be 18 by this December 31st. No one who is not an original Registered contributor to an RESP can withdraw funds, which you said was wrong.
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Re: RESP Questions

Post by ModeratorZ »

adrian2 wrote:
tedster wrote:I never claimed that it was anything except hearsay. Perhaps instead of this "disparaging remark" you could clarify and say under which circumstances it would be okay?
Read the finiki article. Your hearsay is comparable to advising a random guy you met "I just read a book, it says if you open an RRSP, you'll be getting free money from the government".
adrian2, could you please try to be a bit more respectful in your replies.
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Re: RESP Questions

Post by kcowan »

I have not met tedster nor adrian and I am willing to bet they have not met each other either. You guys need to meet and have a beer. What we have here is the makings of a violent agreement...

(The book has a lot of good stuff in it and so does finiki, but finiki has the advantage of being more current.)
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adrian2
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Re: RESP Questions

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tedster wrote:It seems to me that you are a man looking for hairs to split.
I'm not looking for hairs to split, I'm pointing out that you have inaccurately interpreted the advice from the book. That advice is applicable to a very small number of students, they have to start university in the calendar year of their 17th birthday. Period.
tedster wrote:indeed a "one time" larger than usual contribution can be made to generate a 20% increase
There is no such "one time" opportunity. Not at all. Period.
tedster wrote:In fact My grand daughter was in fact 17 when she was accepted into University and will be 18 by this December 31st.
And once again, she does not qualify for the advice in the book. Period.
tedster wrote:No one who is not an original Registered contributor to an RESP can withdraw funds, which you said was wrong.
This is one thing that I do not have a back up handy. If it makes you happy, I'll take it back. All my other advice is bang on, including pointing out your misunderstandings of a program you "do not give a damn about" and "do not contribute to".
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Re: RESP Questions

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Where are the group hug pictures when we need them?
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Re: RESP Questions

Post by tedster »

I am considerably bewildered. adrian2 has found fault with the way I cite. Even though others do it the same way. In fact I modeled myself on them. With respect to the RESP thread, I thought I was being helpful, instead I got stomped on. I think I do not need this kind of treatment. It has always been difficult for me to discuss with someone who has a need to be always right. I am out of it.
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Descartes
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Re: RESP Questions

Post by Descartes »

tedster's contribution is helpful. Not for my first kid who turned 18 this year and will enter university in September and not for his granddaughter. But perhaps for others.
According to our government:
All children in Canada (up to the end of the calendar year in which they turn 17) are eligible to receive money from the federal government for their education after high school, as long as a Registered Education Savings Plan (RESP) has been opened for them.
The one concern I would have about the excerpt tedster quoted is:
You don’t have to show receipts with making an RESP withdrawal.
When looking at the government pages, I noted:
To withdraw money from an RESP, contact your RESP provider. They will ask to see official proof of enrollment before issuing the Educational Assistance Payment. They may also provide you with a list of allowable expenses that the money can be used for, or they may ask for receipts for school purchases to prove the money is being spent on allowable educational expenses.
It would seem to be at the discretion of the financial institution if they want to ask for receipts or not.
I'll post my experience with BMOIL when I make my first withdrawal to see if they are pedantic about this.

Once again, thanks for all responses. I do appreciate this financial forum a lot .. and just hope we can all get along together a little bit better :)
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kcowan
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Re: RESP Questions

Post by kcowan »

Descartes wrote:It would seem to be at the discretion of the financial institution if they want to ask for receipts or not.
I'll post my experience with BMOIL when I make my first withdrawal to see if they are pedantic about this.

Once again, thanks for all responses. I do appreciate this financial forum a lot .. and just hope we can all get along together a little bit better :)
I have just withdrawn my first contribution for my first grandchild. My institution, TD, did not inspire my confidence when their handy online form would not allow the beneficiary to receive both the EAP contribution and the PSE contribution to her BMO bank account in Ottawa. I had to go into the branch and manually change the completed and printed TD PDF to allow it. They were fussy about getting the official acceptance form from the Uni. No other receipts demanded as yet and I would expect they might ask for them now rather than after the fact (but who knows?).

(You have to appreciate that details are important. That is what makes FWF reliable.)
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adrian2
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Re: RESP Questions

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kcowan wrote:My institution, TD, did not inspire my confidence when their handy online form would not allow the beneficiary to receive both the EAP contribution and the PSE contribution to her BMO bank account in Ottawa. I had to go into the branch and manually change the completed and printed TD PDF to allow it. They were fussy about getting the official acceptance form from the Uni. No other receipts demanded as yet and I would expect they might ask for them now rather than after the fact (but who knows?).
No other receipts were demanded a handful of years ago, neither by TD nor by Altamira/National Bank.
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Descartes
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Re: RESP Questions

Post by Descartes »

An interim report on RESP withdrawal involving BMO Investorline:

1. they can only withdraw the money to a BMO or BMO Investorline account.
2. after 20K of EAP withdrawal, they require receipts.

The first is a pain-in-the-ass requiring an additional, unnecessary banking transaction for me.
The second, I believe, is exceptional among the typical RESP vendors and may cause me to transfer the RESP family account to another institution in the future.
We shall see...
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Re: RESP Questions

Post by twa2w »

is the receipts after 20,000 based on if you take more than 20K in one year or is it 20K in accumulated withdrawals. Me thinks it is only if you withdraw more than 20K in a year, which is reasonable.
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Re: RESP Questions

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twa2w wrote:is the receipts after 20,000 based on if you take more than 20K in one year or is it 20K in accumulated withdrawals. Me thinks it is only if you withdraw more than 20K in a year, which is reasonable.
20K EAP per beneficiary per year. So it resets each calendar year.
Let's say you do two 12K EAP withdrawals in the calendar year for the same beneficiary, since the aggregate exceeds 20K then you must provide receipts for the total amount of both withdrawals.

Once again: this is for BMO Investorline.
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Re: RESP Questions

Post by twa2w »

OK so just to clarify. There is a difference between withdrawals and EAPs. EAPs are from the grants and growth on the plan. Your contributions are not considered EAPs when withdrawn. The contributions you made are referred to by another acronym when withdrawn, depending on the institution - some call it a ROP some call it a PSE etc.

So is the BMOIL limit based on EAPs or total withdrawals?.

Couple of things
If a student starts her program in Sept, you could withdraw up to 20K as EAP before Xmas before having to provide receipts (the EAP will be taxed in the child's hands for that year). Then you could withdraw less in Jan/Sep of the following year. Likely by then, unless you have very large growth, most of your EAP would be used up.
Just remember in the first 13 weeks of the program, you can only withdraw $5,000 of the EAP. This mean you would have to time the withdrawals between Sept and Christmas.
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Descartes
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Re: RESP Questions

Post by Descartes »

There is a difference between withdrawals and EAPs. EAPs are from the grants and growth on the plan. Your contributions are not considered EAPs when withdrawn. The contributions you made are referred to by another acronym when withdrawn, depending on the institution - some call it a ROP some call it a PSE etc.
Yes, yes, yes, and yes (BMO Investorline calls them capital withdrawals).
So is the BMOIL limit based on EAPs or total withdrawals?
EAP only. I guess I didn't make that clear enough above.
If a student starts her program in Sept, you could withdraw up to 20K as EAP before Xmas before having to provide receipts (the EAP will be taxed in the child's hands for that year). Then you could withdraw less in Jan/Sep of the following year. Likely by then, unless you have very large growth, most of your EAP would be used up.
Just remember in the first 13 weeks of the program, you can only withdraw $5,000 of the EAP. This mean you would have to time the withdrawals between Sept and Christmas.
Sounds like you have a handle on it except for the part about "Likely ...most of your EAP would be used up". That's not a good assumption, at least for some.
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Re: RESP Questions

Post by twa2w »

Likely by then, unless you have very large growth, most of your EAP would be used up.
Sounds like you have a handle on it except for the part about "Likely ...most of your EAP would be used up". That's not a good assumption, at least for some.
:) That is why I said " unless you have very large growth". Congratulations on the performance of your RESP.
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Re: RESP Questions

Post by Descartes »

twa2w wrote: :) That is why I said " unless you have very large growth". Congratulations on the performance of your RESP.
Well, thank you.. but can you not also imagine a situation where the subscriber would still have 20+K EAP remaining but then be notified, unfortunately, that the beneficiary does not want to complete the undergraduate degree or does not want to continue into graduate school?

In such an unpleasant situation, despite the beneficiary's decision, a subscriber might still want to benefit from the growth and grant accumulated..
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Re: RESP Questions

Post by Descartes »

I raised the following question in August:
The main question for me that remains open even after browsing through the government pages:
"Is the current growth in the plan "distributed" to each child proportional to the total CESG provided to that child for the sake of the calculation or is the current growth just one big communal pool for the sake of the calculation?"

The amount of the CESG remaining after a withdrawal of EAP can be very different depending on the answer.
Well, the answer appears to be one big communal pool based on the CESG versus EAP Income breakdown I received from the BMOIL withdrawal yesterday.
(One nice thing is that BMOIL breaks down the CESG and EAP(Income) payments as separate line items in the transaction history)

It appears to be the following calculation for a family RESP:

total EAP balance = (total account balance) - (total contributions made for all beneficiaries)

CESG % of an EAP withdrawal for a beneficiary = (total CESG provided to all beneficiaries) / (total EAP balance)
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Re: RESP Questions

Post by kcowan »

You also get a letter after each EAP withdrawal saying exactly how much CESG was included. So by year four, we should be able to hit the $7200 target very closely.
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Re: RESP Questions

Post by Germack »

I will be opening an RESP account for my daughter to buy the balanced Mawer fund. I have all my investments with TD but unfortunateley I will not get QESI with their mutual fund account.with a td waterhouse account i would get qesi but it cost $50 per year. Is there any brokerages where I can buy Mawer funds, are without a yearly fee and I will get the qesi?
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Re: RESP Questions

Post by Quebec »

In theory, Questrade can get the QESI for you and has no yearly fees on RESP accounts. In practice, I tried that a few years ago and was never able to get the provincial grant, they were totally confused about it. The federal grant arrived quickly though.

After endless phone calls, etc., I eventually transferred the account to Gestion Ferique. You need to have an engineering degree to open an account there. They only have active mutual funds but the MERs are reasonable-ish. Transactions are made on the phone only for RESPs. No problems getting the QESI there. I run a three-fund portfolio for the RESP account (1. Canadian equities, 2. global ex-Canada equities, 3. Canadian bonds). Advantage over a balanced fund is that you can change the asset allocation to make it more conservative as time passes.

Other option is stick with TD waterhouse, swallow the $50 fee every year, and tell yourself you are getting a $700 total grant (fed+prov) per $2.5k invested instead of the usual $750. Then you can use TD e-funds there, and perhaps switch to a GIC ladder a couple of years before higher ed starts.
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Re: RESP Questions

Post by SoninlawofGus »

Question at the end. Here's the background...

We have two RESPs for our two kids. Both are family plans. We started these in 2004, when our oldest was 2 and our youngest was just born. We have family plans, one with TDDI and one with iTRADE. AFAIK, both institutions split the amount contributed equally per child each year. And we got the expected CESG each year.

Last fall, I decided (admittedly belatedly) to overcontribute some of the remaining room -- not capturing the CESG. This was a one-off. I forecasted out the next three years, keeping within the $50,000 per child limit. We had already made the normal $5000 contribution ($2500 per child).

The extra one-off amount was in excess of $10000. Oddly, on Dec. 31 2015, we received a $291 grant in our iTrade account for just one of our children, the youngest one. I'm not clear on how this could have happened. It would seem to represent "carry forward" room, but I have tracked the amounts contributed every year and thought we had maxed out CESG.

That got me to thinking that, perhaps, one of the institutions incorrectly assigned all of a year's contribution to just one child. That could get us into trouble in terms of over contributions above the $50,000 limit for one of our kids. RESPs contributions are per child, not per plan.

So, who do I contact to track how much was contributed per child? CRA, ESDC, or the FIs? I realize that CRA slaps people with overcontribution penalties, but it's not clear who tracks that or even how they apply the penalty (now or later when it's withdrawn). It's also not clear if I'll be informed at all if I've done anything wrong. The Who Does What on the Canlearn site isn't clear on where to go.
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