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  • Oct 4th, 2017 4:29 pm
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[OP]
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Mar 23, 2016
460 posts
145 upvotes

RESP - Just had baby

We just had a baby! Finally after months of waiting.

Yip.

RESP question - which ones would you recommend and is RESP a must? What happens if the kid decides not to go to university or goes overseas or something? :D
16 replies
Sr. Member
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Oct 16, 2007
955 posts
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RESP is nice because the gov't matched 20% (upto set limits). If the kid does not goto university you can transfer the payments to your RRSP or close the account, however you will lose the gov't grants and interest gained on the grants. If they goto a overseas university, i think its ok as long as there is proof and courses last 13 weeks.
- Insert Soemthing here so you will be able to recoginze me.
Deal Expert
Aug 22, 2011
15155 posts
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Ottawa
You can open a self directed investment account or a GIC, MF with a bank.
Member
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Oct 21, 2009
215 posts
29 upvotes
Do a search for RESP's on here. Lots of info in there.
Sr. Member
Aug 2, 2017
650 posts
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Logtown
Mix and match and stay within the insured limits.
Penalty Box
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Feb 9, 2003
16157 posts
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Langley
I opened one with Questrade since I already had accounts there. They don't charge a fee for self directed accounts.

I put in $100 every payday in order to max out the 20% government match. 50% TSE60 EFT, 30% S+P 500 hedged to Canadian$, 20% MSCI World EFT hedged to Canadian$.

If the kid doesn't want to go to school, just have him register, withdraw the money, and never attend classes. Some time before 35 or whenever the max age is.
[OP]
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Mar 23, 2016
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Thank you.

We are completely sleep deprived - does it matter when we open it i.e. should we prioritize this?
Deal Expert
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Mar 18, 2005
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Niagara Falls
i6s1 wrote:
Sep 28th, 2017 7:57 pm
I opened one with Questrade since I already had accounts there. They don't charge a fee for self directed accounts.

I put in $100 every payday in order to max out the 20% government match. 50% TSE60 EFT, 30% S+P 500 hedged to Canadian$, 20% MSCI World EFT hedged to Canadian$.

If the kid doesn't want to go to school, just have him register, withdraw the money, and never attend classes. Some time before 35 or whenever the max age is.

There are rules around how much can be withdrawn in a given semester, so it's not as easy as registering for classes and trying to take all the money out. I haven't read over all the rules regarding how much you can take out yet since I have a long while before my kid will use his RESP but I know they exist.

One trick I did read about though is that you can dictate what portion of the money is used first, so you can ask for the Government's grant money to be used for the first semester, then if your child decides to not continue school move your money elsewhere.
springdays wrote:
Sep 29th, 2017 6:46 pm
Thank you.

We are completely sleep deprived - does it matter when we open it i.e. should we prioritize this?
Unless you are planning on putting a lump sum down, the sooner the better. We just throw $210 each month of our Child benefit money into that account so it makes it a little easier.
Penalty Box
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Feb 9, 2003
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Langley
Evil Baby wrote:
Sep 29th, 2017 10:09 pm
There are rules around how much can be withdrawn in a given semester, so it's not as easy as registering for classes and trying to take all the money out. I haven't read over all the rules regarding how much you can take out yet since I have a long while before my kid will use his RESP but I know they exist.
The money that was contributed by the sponsor can be withdrawn without tax.

For the non contribution amount (government, grants, stock growth, dividends, interest and etc portion), it's 5000 for the first 13 weeks then no limit. And withdrawals can be made up to 6 months after the end of school.

Not that I plan on doing this.

Even if you want to stay legit, If there's a lot of money in there, it might be a no-brainer for the kid to just go to school for a semester to two, rather than give all that money back.
Penalty Box
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Feb 9, 2003
16157 posts
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Langley
springdays wrote:
Sep 29th, 2017 6:46 pm
Thank you.

We are completely sleep deprived - does it matter when we open it i.e. should we prioritize this?
If you have $2500, you should open it before year-end to max out this year's grant so you get an extra year of earnings.

If you're liable to spend money earmarked for the RESP until it's opened, then you should open it asap so you can start locking it away.

If you're good at squirling the money away, then the only harm in waiting is the lost interest/growth/dividends until the account gets opened.

I had socked some money away for post-birth expenses (which were lower then I expected thanks to ample hand-me-downs from his 5 older cousins.) I planned on maxing the grant money with 2500 in contributions each year. Since I opened it in the summer, I just did the math and put an initial lump sum. The lump sum plus ~$100/payday added up to about 2500 in the first year.

And just in case you're curious about how much $ you can expect,

If you put in 2500 each year and get the 500 match each year for the 15 years from age 0-14 (200 in the last year due to the 7200 lifetime max.)

3000/year earning 6.5% growth over 15 years is about 75000. If you stop contributing at that point, and it grows another 3 years, it would be about 90k. I don't think there's too much point, for a middle class guy like me, to contribute more than 2500/year for the first 14/15 years.
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Mar 18, 2005
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Niagara Falls
i6s1 wrote:
Sep 29th, 2017 11:22 pm
The money that was contributed by the sponsor can be withdrawn without tax.

For the non contribution amount (government, grants, stock growth, dividends, interest and etc portion), it's 5000 for the first 13 weeks then no limit. And withdrawals can be made up to 6 months after the end of school.

Not that I plan on doing this.

Even if you want to stay legit, If there's a lot of money in there, it might be a no-brainer for the kid to just go to school for a semester to two, rather than give all that money back.
Thanks for clearing that up.
Sr. Member
Jan 2, 2015
959 posts
356 upvotes
springdays wrote:
Sep 29th, 2017 6:46 pm
Thank you.

We are completely sleep deprived - does it matter when we open it i.e. should we prioritize this?
Congrats and welcome to the sleep deprived days. They were tough. If you have a choice between sleeping a few extra hours or rushing to get your resp done, choose sleep for now. You can always catch up later. If miss the contribution for this year, you can double up in 2018 and still get the grants. My kids were born in dec, and I was so sleep deprived For the first 4 months. I didn't contribute the year they were born, and just did it the following year. No worries and not much doffer nice.

Your first priority is getting settled wi the baby.
On a 'smart' device that isn't always so smart. So please forgive the autocorrects and typos. If it brothers you, then don't read my posts, but don't waste my time correcting me. If you can get past the typos, then my posts generally have some value.
Newbie
Aug 23, 2017
46 posts
35 upvotes
Quebec
Congratulations on the new baby. I just have to add to all the good advice above: make sure you avoid all "group" RESPs - the only good ones are self-directed family plans from a financial institution. Group RESPs are notorious for fee-gouging (most of your early contributions are eaten up by fees, significantly affecting long-term performance), and lock-in (try to leave and you'll lose thousands). They are also notorious for incessant and unpleasant high-pressure marketing tactics, including via hospitals and doctor's offices.

So, get a plan from a bank/credit union or broker (including online ones like Questrade or Wealth Simple), even if you just have one kid at the moment opt for a family plan so if you have more than one kid it only takes one of them to go to university to keep the grants, and maximize your contributions early so you can profit from the growth over the longer-term. Be careful of fees (MERs etc.) like for any other investment. Make sure your provider can obtain all the relevant grants for your province, not just the federal ones. A self-directed plan can be transferred between different institutions, and you can modify or stop your contributions without penalty. Regular contributions are better than lump-sum additions, but don't turn down lump-sum gifts from family members - that's how I started the plan for my kid!

Try to get the plan open before the end of the year. Start by talking to your bank, then shop around. :)
[OP]
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Mar 23, 2016
460 posts
145 upvotes
Thank you again EVERYONE! So helpful and thanks for the Congrats :)
Life is a blur at the moment, I sneak in a few minutes here and there on RFD and being able to ask you all some questions help a lot.

Cheers :D

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