Personal Finance

question about RESP family plan

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  • Jul 31st, 2012 11:19 am
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Newbie
Aug 21, 2009
4 posts
Toronto

question about RESP family plan

Hi, I am looking at family plans, my eldest is 13yr, youngest is 1yr old. my eldest doesnt have a RESP, I am afraid even if I put maximum amount in RESP for her, it is not gonna be enough for her. I was thinking if it is not enough when she goes to university/college, I can use the fund from my youngest to supplement my eldest, since my youngest still have time to accumulate her fund later on. Is it possible? how the family RESP works? appreciate your advice :)
5 replies
Member
Aug 2, 2003
492 posts
69 upvotes
Toronto
In order to achieve the max. in grants for the 1 yr old simply contribute $2500 this year and each and every year.
If you start an account for your thirteen-year-old child, you can contribute $2,500 (this year’s contribution room) plus another $2,500 (a previous year’s unused contribution room) for a total of $5,000, to receive a grant of $1,000. You are allowed to contribute more than $5,000 in this scenario, but there will be no grant paid on the amount above $5,000. When calculating contribution room carryover from past years, don’t forget that the contribution limit was only $2,000 prior to 2007. So you can play catchup for the 13 yr old by contributing $5000 each year for the last 5 yrs ( and by then the 13 yr old will be 18 )

What your saying is possible BUT keep in mind the Gov't grant. Your one year old only can get grant for one year. By contributing more than $2500 and less than $50,000 your losing out on the grant.

Your best bet would be to check with the institution you will be opening your family resp with.

Hope I was able to clarify some things for you.
Deal Guru
User avatar
Nov 19, 2002
12253 posts
858 upvotes
Frank is right on in the amounts and timing. I would definitely start ASAP...where else are you going to get an instant 20% return on your investments?

One thing you may need to keep in mind is that some RESP accounts, such as TD Waterhouse Self Directed ones, will automatically divide your contributions evenly between all the beneficiaries unless you specify otherwise. So be sure that your $5K vs $2500 contributions are winding up with the right child to maximize your 20% match from the gov't.
Newbie
Aug 21, 2009
4 posts
Toronto
I understand the unused contribution part, but my 13yrs old doesn't have that because she just arrived in Canada this year (newly landed), I will only have 4 years to contribute for her, so I wonder if I can use some grant from my youngest's fund to help out my eldest? help. thanks
Moderator
May 28, 2012
12484 posts
5278 upvotes
Saskatoon
From my understanding, in a family plan, if you have one child that ends up not using the funds, the money (minus the gov't grant) can be used for the other children. That would be the one advantage of having a family plan rather than individual ones. It probably would be best to go on the government site to check. If you can maximize the four years the oldest has to contribute, it is certainly better than nothing.
Deal Expert
User avatar
Nov 15, 2004
21786 posts
4903 upvotes
Toronto
wesboag wrote: No you cannot use the grants from your other child. It does not work like that. You can pass on your contributions and growth (if any) and thats it. Hence why there is no difference between a family plan and individual plan except how it is initially set up.
This is wrong. A family RESP lets any child use grants paid to any other child. I suggest you stop spreading misinformation like this and do some research. Read the following and pay special attention to this part:
"CESG paid into an RESP may be used by any beneficiary of the RESP to a maximum of $7,200 per beneficiary"

http://www.hrsdc.gc.ca/eng/learning/edu ... s/08.shtml

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