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Aug 22, 2009
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TFSA for kids

From my understanding TFSA requires you to be 18 years old. My kids are a way off from 18, but I was hoping to put some money away for them. We have a bunch in an RESP, but are told not to over invest in the RESP in the case that one of them doesn’t do post secondary education.

Can I open a TFSA in my name then transfer to them when they turn 18?
23 replies
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Jan 19, 2017
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Easto wrote: From my understanding TFSA requires you to be 18 years old. My kids are a way off from 18, but I was hoping to put some money away for them. We have a bunch in an RESP, but are told not to over invest in the RESP in the case that one of them doesn’t do post secondary education.

Can I open a TFSA in my name then transfer to them when they turn 18?
Why not just keep it for your own TFSA if you have contribution room left?
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Sep 7, 2009
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How can you contribute when there is no contribution room.
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Jan 9, 2011
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Easto wrote: From my understanding TFSA requires you to be 18 years old. My kids are a way off from 18, but I was hoping to put some money away for them. We have a bunch in an RESP, but are told not to over invest in the RESP in the case that one of them doesn’t do post secondary education.

Can I open a TFSA in my name then transfer to them when they turn 18?
Just open RESPs. It's not like you lose all the money if they don't go to post-secondary.
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Jun 26, 2019
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Easto wrote: From my understanding TFSA requires you to be 18 years old. My kids are a way off from 18, but I was hoping to put some money away for them. We have a bunch in an RESP, but are told not to over invest in the RESP in the case that one of them doesn’t do post secondary education.

Can I open a TFSA in my name then transfer to them when they turn 18?
If you have available contribution room in your TFSA, you can invest the money there and then gift it to them at a later date.

Also, I think with the cost of education and everything you can use your RESP for, and the fact that you generally state that you have more than one kid, it would probably be hard to over contribute.

The money you contribute, you can always withdraw tax free at any point in time.

The grants or cap gains inside the account will be taxed when its withdrawn. Assuming its used for school, it will be taxed at your kids tax rates during that time instead of yours.

Additionally, if you have multiple kids you can shuffle it around accordingly.

Generally speaking, up to $2500 a year you will get an extra 20% grant from the government for your kids schooling. In the end they will have to pay taxes on this amount, but it will probably be low or no taxes as they will be in school and in theory their income will be low.

On the other side, if you think your kids is going to make lots of money while in school, or just not attend school to any major degree, then the TFSA might be the safer bet assuming you have room.
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May 11, 2014
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In the case when the RESP is not used, you can actually transfer the funds into your RRSP minus the government grant (which you wouldn't have earned anyway). The money you contributed as well as upto $50000 of AIP (earned income even on grants) can be transferred. If your spouse isn't registered on the account as a subsriber, you can add him/her and the amount doubles to $100000 ($50k each)

In addition, if any of your children become disabled, the same transfer ability can occur for RDSPs.

And your children have upto age 35 years to use it. People often have to upgrade their education or obtain certificates later in life. A lot of time for the need of these funds to arise.
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Sep 19, 2013
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Easto wrote: We have a bunch in an RESP, but are told not to over invest in the RESP in the case that one of them doesn’t do post secondary education.
I'm observing a few things -
You have more than 1 child since you say "one of them". So there is scope for you to transfer the RESP to another child. There are some rules, but this is an option.

Also, another important factor is if your children dont pursue education, then govt doesnt take away everything. There is a 20% penalty on the investment returns, which is not good. But still you get your contributions back 100%. The grant was never yours to begin with, so its only fair that you dont get that. So weigh in all the factors.
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Jul 15, 2009
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xgbsSS wrote: In the case when the RESP is not used, you can actually transfer the funds into your RRSP minus the government grant (which you wouldn't have earned anyway). The money you contributed as well as upto $50000 of AIP (earned income even on grants) can be transferred. If your spouse isn't registered on the account as a subsriber, you can add him/her and the amount doubles to $100000 ($50k each)

In addition, if any of your children become disabled, the same transfer ability can occur for RDSPs.

And your children have upto age 35 years to use it. People often have to upgrade their education or obtain certificates later in life. A lot of time for the need of these funds to arise.
Only if you have the available RRSP contribution room.
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May 11, 2014
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bubak wrote: Only if you have the available RRSP contribution room.
Sure. But since the child can have the RESP until 35, you can kinda plan for it. If I child doesn't go to school by 30, what are the chances by 35? Then, just build the room as you go.
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Invest in crypto, and gift the crypto to kids later.
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xgbsSS wrote: Sure. But since the child can have the RESP until 35, you can kinda plan for it. If I child doesn't go to school by 30, what are the chances by 35? Then, just build the room as you go.
This works as long as your employer doesn't have a pension plan. With a pension plan, RRSP contribution room is tiny.
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Even on a db plan you probably would still have a couple thousand in room a year. You have at least 18 years to build up the room between two spouses.
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Apr 13, 2003
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Mr Bean wrote: I'm observing a few things -
You have more than 1 child since you say "one of them". So there is scope for you to transfer the RESP to another child. There are some rules, but this is an option.

Also, another important factor is if your children dont pursue education, then govt doesnt take away everything. There is a 20% penalty on the investment returns, which is not good. But still you get your contributions back 100%. The grant was never yours to begin with, so its only fair that you dont get that. So weigh in all the factors.
Do you have to give back only the 20% that was originally the government grant or also the growth from that 20%?
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Sep 19, 2013
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Riaz wrote: Do you have to give back only the 20% that was originally the government grant or also the growth from that 20%?
You've to give back all of the govt grant.
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You've to give back all of the govt grant.
I am hoping the kids put good use to the RESP. however, if they dont use it, after personal TFSA and RRSP, my RESP is a good option for me to have investing than using the non-registered acct.. if i had to return the full amt (without any gains), it is like an interest free loan for investing .
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Aug 12, 2016
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Is there a way that an individual can put a total of $1,000,000 in his TFSA during his lifetime? If the annual limit is $6,000 how do people manage to put $1,000,000 in their TFSA's?
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Savak2015 wrote: Is there a way that an individual can put a total of $1,000,000 in his TFSA during his lifetime? If the annual limit is $6,000 how do people manage to put $1,000,000 in their TFSA's?
You can’t put that much in. But you can invest the money and grow to $1 million.
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Jul 15, 2009
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wakka2u wrote: I am hoping the kids put good use to the RESP. however, if they dont use it, after personal TFSA and RRSP, my RESP is a good option for me to have investing than using the non-registered acct.. if i had to return the full amt (without any gains), it is like an interest free loan for investing .
Are you aware that if the kids don't go to school or you transfer it to your RRSP, all of the gains are fully taxable at your marginal tax rate plus a 20% penalty?
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Sep 14, 2012
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ml88888888 wrote: You can’t put that much in. But you can invest the money and grow to $1 million.
Also, investors need to be careful since if the value of a person's TFSA is too high, it will/can attract CRA's attention and they have been known to cancel the tax free benefit of the account if they consider that the person's investing was a "business" (like day trading): https://www.moneysense.ca/save/investin ... -unlikely/

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