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Resp?

AC

AC

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Anyone done this for their kids? Any insight? I am in the process of setting up an appointment with my bank. Heritage Education Funds called the wife today, guess they got her info from the hospital. I did a quick google search and "avoid like the plague" comes up..lol
 
I have 3 kids and was going to do it and like you asked around and looked into it.... its not that bad but the main thing I dislike was if they dont use it just for school then they get through the @ss when they decide to take it out. There are better options out there... as we would like the kids to go to school for something, that doesnt always happen.
 
ajaxguy said:
I have 3 kids and was going to do it and like you asked around and looked into it.... its not that bad but the main thing I dislike was if they dont use it just for school then they get through the @ss when they decide to take it out. There are better options out there... as we would like the kids to go to school for something, that doesnt always happen.
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+1

If the kids don't go to school the government takes every dime they put in back.
Also you have to put your after taxes money into these accounts and then they get taxed again when the money is removed.
 
Don't get it through a Trust. If you quit half way through, which is very highly likely, you lose everything. Trust are able to guarantee their funds to a certain extent because it is expected a certain percentage of contributers will quit the plan, thus forfeiting their funds into the general pools of the Trust Funds.

RESP's are different - and they arent too bad. Funds invested grow tax free. As well, the Government will contribute an extra 20% on the first $2,500 contributed every year, which amounts to an extra $500 per year up to a maximum lifetime grant of $7,200 per child. Free money.

Regarding the 'tax' comment - the funds are taxed in the childs hands when withdrawn. Meaning when the kids in University, how much could their income be, $15k - $20k/yr. The taxable income they will be making in University are so low anyways, the taxable implications are very little.

If the kid doesnt go on to post secondary education, not a big deal. Transfer the funds to your own RSP, if you have room. If you just want the cash, you can take it back. The principle portion contributed is given right back to you, any grants recieved have to be given back to the government. Only tax you pay is on any of the interest earned.

So of the two - dont go with the Education Trusts - RESP's offer better options and flexibility.
 
jeffjones said:
+1

If the kids don't go to school the government takes every dime they put in back.
Also you have to put your after taxes money into these accounts and then they get taxed again when the money is removed.
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Open a family plan (not individual for each child) at whatever bank you deal with. The government will contribute 20% of whatever you contribute to a max of $500 each child/each year. At a free 20% it's a no-brainer if you can afford it. As far as taxation goes.... your child will pay tax on whatever interest/investment income you earn - not on the entire account value - and chances are they will be below the taxable amounts or first tax bracket anyway. If your child does not go to college/university than yes, the govt. will take back what they've contributed but you still get to keep what interest/investment you've made from their cash. Finally, by opening a family plan you have a fair bit of maneuverability between the children - this comes in handy as you can start withdrawing govt. contributions first - once they're gone the govt. will not ask for it back in the event that the other child(ren) do not attend. Drop me a PM if you want more info. Happy to set you up with someone to help if you like.
 
RESP!

It is a forced savings plan, we went to Scotia Bank several when the program started, and established individual plans for each child. My first son just started university this fall and now has $38k in his plan. We contributed $177 per month per child $2 000 per year and the got $400 matching.
 
when did you start?

STARSHIP said:
RESP!

It is a forced savings plan, we went to Scotia Bank several when the program started, and established individual plans for each child. My first son just started university this fall and now has $38k in his plan. We contributed $177 per month per child $2 000 per year and the got $400 matching.
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We used an RESP thru RCB investments. This I know as first hand, RBC will invest your RESP into a mutual fund if you dont direct it otherwise, it may do well or it could drop in value. Ours did but we had time to recover.
Even if your kid doesnt go to school its ok, transfer to an RRSP and your good to go.
The fed's dont really monitor this stuff well, if your kids in the last yr and you pull out the balance of the fund, they may never know.......

Avoid the trusts and accounts that are not part of a chartered bank, getting your funds means providing reciepts for expenses paid, meaning your out the 3,000k tuition and 600 in books and just want reimbursed. They are a huge hassle to get your own money back. Even RCB securities was a bit of work.

Anyone with kids should look seriously at this unless your loaded. The federal top up is found money.
 
Do it even if you're loaded.

It's all about getting the $500/year/child from age 1 thru 17 - EDIT with max of $7,200 total grant/child. As others have said make sure you start a Family plan so if any one child goes to school the money can be used. Lots of schools are eligible i.e. your kid doesn't have to go to university. If you've missed some years you can still catch up (but at a proscribed rate).

The paperwork is tricky when withdrawing money but it's pretty liberal, i.e. you can get the grant money out first.

Go with one of the big 5 banks.
 
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What happens if the kid decides to take a few years off after high school before pursuing post secondary education?
 
murf said:
Dont they have to be 18?
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you wont get grant money top ups (8.500) into a TFSA, only for an RESP, and it goes to continuing education, they can take yrs off between secondary school and college/uni. Even if no kid goes to school, yes you give back the grant money, but you transfer the rest to an RRSP and your good to go.

There are some guys on this forum that are actually in the investment business that could help here, but as a parent that did it and put two kids through school with it, I would open it the day a kid was born. I saw no downside.
 
I assume the nice/hard/dangerous part of a TFSA when saving for a child's education is that it's easily accessible to the parent in case of an emergency. There's money there that's accessible for an emergency, and as we know some parents see the money and will tell themselves 'well just a little bit this time because I/we NEED/WANT this or that'...then another time, and you can end up with a small amount. Mind you I have no kids yet, so I'm following this thread with interest for future needs.
 
crankcall said:
Even if no kid goes to school, yes you give back the grant money, but you transfer the rest to an RRSP and your good to go.
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Thats the only downside, You put net pay money into this (Unlike RRSP) and if you transfer it to RRSP's you get taxed again when you take it out. So technically you get double taxed and all the government money taken back if they don't use it, But very useful if they do use it.
 
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