Personal Finance

Questrade charges RESP withdrawal fee for each transaction

  • Last Updated:
  • Oct 20th, 2020 3:50 pm
[OP]
Newbie
Jan 24, 2017
95 posts
26 upvotes

Questrade charges RESP withdrawal fee for each transaction

My child will go to university this fall. When I made an EAP withdrawal from RESP recently, Questtrade charged me $50 for each transaction due to partial deregistration. I have more than 100K in my RESP account. How could I avoid this fee each time? Is there same fee in other 5 big banks?
21 replies
Deal Addict
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May 11, 2014
4715 posts
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Iqaluit, NU
Deregistration fees at self-directed brokers tend to be $25-$50 so this very typical. At this juncture, transfering to a bank is probably more expensive and not worth the hassle. Honestly, I would eat this fee after saving a lot in other fees. The only way to reduce the fees is to reduce the number of deregistrations, but withdrawing too much in a single year may result in income taxes for your child.

Perhaps try talking to Questrade and see if they can make a deal. If you bring in new money in your accounts, they may waive them one time.
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Sr. Member
Sep 22, 2005
723 posts
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BC
I have never paid any fees for withdraw from TDDI's Self directed RESP account. You just go to a TD branch, fill out the forms, they fax it to TDDI, and money shows up in td bank accounts(kid's and mine) within a week.
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Sep 19, 2013
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I also have my RESP with Questrade and at some point in future, this will be my concern too.

I didnt know RESP withdrawals are partial deregistration, thats weird. So can you do a one time transfer out from Questrade to TD, eat the $150 transfer fee and use TD to withdraw?
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Mr Bean wrote: I also have my RESP with Questrade and at some point in future, this will be my concern too.

I didnt know RESP withdrawals are partial deregistration, thats weird. So can you do a one time transfer out from Questrade to TD, eat the $150 transfer fee and use TD to withdraw?
Sure you could do that, except you have to decide if the hassle is worth doing. Additionally you need to make sure that your assets are either liquid and can transfer. For example, if you hold ETFs and do the transfer, now you have to pay $9.95 in commissions to sell them at TD vs $4.95 (assuming you do it in a manner to avoid ECN fees). And depending on the agreement with GICs and mutual funds, you may not be able to transfer these assets over (brokerages have agreements and offer deposits at select institutions which may not be available at the other)

Honestly, I would eat the fee, but if this is the route you want to take to save maybe $50 (assuming you pay $150 to transfer, not sure if TD will cover it considering the RESP is being collapsed at this point but you can definitely try), you should sell all assets and have the account in cash prior otherwise it could be tedious.
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Sr. Member
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May 19, 2006
505 posts
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I suppose that's their pricing strategy which is to not charge anything on the way up with free ETF trading but get you on the way out.
Would it have been better to charge you higher trading fees and an annual fee but then process withdrawals for free like other brokers?

At 0.05% of the balance, maximize the withdrawals and just feel good about yourself that you were able to outperform 99% of all RESPs as there are alot of people who don't or can't even put $50 towards their kids future.

Take out all the PSE original contribution now (probably about $35,000 if you maxed out every year) and invest it and make that $50 back plus more in a week with a good trade or two ...
Member
Aug 17, 2006
492 posts
255 upvotes
Toronto
Huh... I didn't know there would be a deregistration fee either. Thanks for letting us know!

I guess you could easily plan for one withdrawal per year which would only result in a $50 fee per year.

You could also transfer your RESP in-kind to another financial institution (that didn't have any withdrawal fees) and most places would cover the transfer fee.

The first option seems like the easiest when my kids eventually withdraw.
Deal Addict
Aug 1, 2006
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tweep0 wrote: Huh... I didn't know there would be a deregistration fee either. Thanks for letting us know!

I guess you could easily plan for one withdrawal per year which would only result in a $50 fee per year.

You could also transfer your RESP in-kind to another financial institution (that didn't have any withdrawal fees) and most places would cover the transfer fee.

The first option seems like the easiest when my kids eventually withdraw.
I don't have any accounts with Wealthsimple, but I read they will reimburse transfer fees for transfers over 5000.00 ( one time ) . Maybe someone on RFD has a Wealthsimple RESP who can comment
Deal Fanatic
Jul 1, 2007
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Banks and investment dealers make money off you over the many years that the money in the RESP is invested, then charge you nothing for withdrawals.

Discount brokers make far less money off you over the years that you're invested and then only charge you for actual administrative work done (the withdrawal, which is far more complex than RRSP or TFSA withdrawals).
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Deal Addict
Oct 18, 2003
1422 posts
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For those with questrade how long does it take for CESG to show up and can you use CESG money just as your contribution to buy stocks.

With family RESP if I makeup for previous one year, is there a self serve way to specify the split for the deposits to ensure that CESG for previous year and current year comes in correctly, not sure how it takes for CESG to show up (once end of year?)

What is the withdrawal strategy people have used here with family plan withdrawal take contribution out last being tax free and take CESG and growth out first . Can the contribution and CESG be taken by any child like the growth portion. Is it better to use TFSA instead
Jr. Member
Mar 18, 2006
172 posts
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runeash wrote:
With family RESP if I makeup for previous one year, is there a self serve way to specify the split for the deposits to ensure that CESG for previous year and current year comes in correctly, not sure how it takes for CESG to show up (once end of year?)
I have just finished transferring in to Questrade, and was told that for new contributions, it will follow the splits you have defined in your signup papers. Example, if you have 2 kids, you can set 50-50. If you have 3 kids, 1/3rd each. If a kid is over 18 and 2 under 18, then 50-50 for under 18, etc. I was told to call/message when contributing for first time with them and catching up previous year, to ensure CESG application is made for the correct year. Example, if contributing now in 2020, but want to catchup for 2019, make the $2,500 minimum (to maximize the CESG grant), then contact Questrade to make sure they apply to the feds for the correct year. Once 2019 is caught up, repeat for 2020.
What is the withdrawal strategy people have used here with family plan withdrawal take contribution out last being tax free and take CESG and growth out first . Can the contribution and CESG be taken by any child like the growth portion. Is it better to use TFSA instead
I plan on using growth first (gets taxed to the beneficiary at their tax rate), then use CESG and use contribution last. I believe any beneficiary in a family RESP can use growth portion. Using TFSA is easier to understand with no paperwork, but you have contribution limits to keep in mind and you're forgoing CESG.
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Sep 19, 2013
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runeash wrote: For those with questrade how long does it take for CESG to show up and can you use CESG money just as your contribution to buy stocks.

What is the withdrawal strategy people have used here with family plan withdrawal take contribution out last being tax free and take CESG and growth out first . Can the contribution and CESG be taken by any child like the growth portion. Is it better to use TFSA instead
CESG comes in at the last day of next month. So if you contributed in Sep, wait till Oct end. I think if you contribute early in Sep, it might come at Sep end, but I dont know what the cutoff threshold is. too lazy to check.\

No idea about family RESP.

Withdrawal strategy: Withdraw benefits as long as your child remains in the lowest tax bracket. Depending on how much you will end up with, if you have a lot, you might have to cross a bit in the next bracket. But that is a good problem to have. But I will worry about that closer to when I plan on withdrawing. It should be easy to forecast your child's income at the time.
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Nov 27, 2005
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If you’re catching up for previous years it doesn’t matter which year you’re catching up on. It’s just a cumulative sum. Max you should contribute for any child is $5000 if you have the room. If this doesn’t match your designated allocation on file then you can write a “letter of direction” that states the desired allocation and which deposit for it to be applied against. You can upload the LOD online and they will take care of it. I have been doing this for the past few years without issue.
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Oct 18, 2003
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Thanks all for the answers so far, I can’t find the form for LOD on their site. Is this just letter you type up on your indicating that I want x amount split into contribution between 2019 and 2020 and split between the children equally accordingly.

Can you invest the grant money or that gets locked Incase it need to be paid back in the future

With Basic personal amount for 2020 as an example being $13,229 for federal and $10,783 for so assuming zero income it would make sense to withdraw $10,783 to pay zero tax to avoid repeat de-registration fee for $50 times the number of children. Incase of $13,229 withdrawal the child still gets dinged for Ontario tax on $2,446
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Nov 27, 2005
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runeash wrote: Thanks all for the answers so far, I can’t find the form for LOD on their site. Is this just letter you type up on your indicating that I want x amount split into contribution between 2019 and 2020 and split between the children equally accordingly.

Can you invest the grant money or that gets locked Incase it need to be paid back in the future

With Basic personal amount for 2020 as an example being $13,229 for federal and $10,783 for so assuming zero income it would make sense to withdraw $10,783 to pay zero tax to avoid repeat de-registration fee for $50 times the number of children. Incase of $13,229 withdrawal the child still gets dinged for Ontario tax on $2,446
You do not need to specify the year your contribution is going towards. It doesn't matter. You only need to specify the amount per child. So if you deposit $7500, you can say on the letter $5000 is for Child A and $2500 is for Child B. There is no form for LOD. It's just a letter you type out indicating your instructions. Then upload it as document type LOD.

Once the grant money is deposited you can invest it in anything you want like a regular deposit.
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Oct 18, 2003
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So if you contribute $5000 this year covering 2019 and 2020 for cesg. Can you also contribute $5000 in 2021 to get $1000 using left over limit from previous years

Also it mentions the additional cesg eligibility uses primary caregivers annual income but then it also says family income.
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Sep 19, 2013
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runeash wrote: So if you contribute $5000 this year covering 2019 and 2020 for cesg. Can you also contribute $5000 in 2021 to get $1000 using left over limit from previous years
Yes, so 2021 contribution covers 2021 and 2018. 2022 will cover 2022 and 2017 (if applicable). You can do this until you're all caught up assuming all other rules related to child age, total CESG, etc are being followed.
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