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Old 10-01-2016, 01:04 PM   #1
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This is kind of a small question, but I haven't found a clear answer online, and I'm not sure where to put this, so I'll just start a new thread.

I see that there's a carryforward rule with RESPs where I can contribute $5000 per year to catch up for under-contributions in previous years. My question is if this works like a TFSA, where you don't have to have an TFSA open to accumulate this amount. Or can I only catch up on RESPs that have been opened in the past.

I guess the question is: Do my under contributions accumulate whether or not I have an open RESP for that child?
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Old 10-01-2016, 01:56 PM   #2
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The contribution limit per child is $50,000 and you can contribute it all at once, if you want. The reason why folks space out their contributions is to maximize the CESG grants, which is 20% of the contribution up to a maximum grant value of $500 per year (and $7200 limit lifetime). So to maximize your CESG grants, you would have to contribute at least $2,500 per year for 14 years (without exceeding that $50,000 lifetime limit), and at least $1,000 in one year.

The carryforward rule I believe is related to grant-eligible contributions. Let's say you normally contribute $2500 per year to get the $500 grant , but then you missed contributing for a couple of years. The next year, you're allowed to carryforward the contribution from one year previous and contribute $5000 to get a $1000 grant. But the year after that, you wouldn't be able to carryforward the other missing year. But if you refer to the last sentence of my previous paragraph, you can miss some contributions and still maximize your grants.
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Old 10-01-2016, 02:19 PM   #3
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^ This is basically your answer, except that the grant room (which is really what is carrying forward here) continues to carry forward to age 17. So theoretically if you started at 10 years of age for the child, you could contribute $5000/yr and get $1000/yr for those seven years and get just under the full CESG which is $7200.

There isn't an obligation to have had the RESP open for that room to accumulate either, just as you note with the TFSA.
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Old 10-02-2016, 12:22 AM   #4
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I did not know you could carry forward your grant eligible grants that far. Good to know. I should really let the experts answer these types of questions.
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Old 10-02-2016, 12:05 PM   #5
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Originally Posted by snootchiebootchies View Post
I did not know you could carry forward your grant eligible grants that far. Good to know. I should really let the experts answer these types of questions.
I don't mind at all if someone else answers, so no problem at all on that end. The carryover and grant issue (and really the whole system) ought to be simplified in my opinion.

I know what they're trying to guard against is people with lots of money dropping the full $50k in for a newborn and having it grow for a few decades tax free. It's just a pain to continually track how much room is remaining and things like that. Not the end of the world, but people contribute odd amounts in a lot of cases so it's not just a simple $2500 or $5000 per year sort of thing.
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Old 10-12-2016, 12:14 PM   #6
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Another potentially stupid question, is the yearly limit a calendar year, or a birth year? My daughter was born in June. If I pay 5000 into the RESP this October can I put in another 5000 in January and get the full grant?
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Old 10-12-2016, 01:04 PM   #7
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No, if your daughter was born this past June the full amount you can put in is $2500, and then $2500 in January. It goes by calendar year, but you can only put the $5000 in if you have grants from prior years that were not claimed.
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Old 10-12-2016, 01:53 PM   #8
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She was born in 2004. I've only been putting in a grand every year, so I've got the room to add 4 grand for a couple years.
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Old 10-12-2016, 02:02 PM   #9
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OK, sounds like its under control! Just didn't want to mess you up and get you putting in money that wouldn't be given grants right off the bat.
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Old 12-05-2016, 10:06 PM   #10
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Slava,

I have an old RESP account that I pay a bit of money into every month with an RESP provider, but far short of the maximum. I was hoping to open a new RESP account with a different provider, and use that to top up the remainder of my contributions. Am I not able to receive the grant (CESG) for both accounts? Or is that only the learning bond (CLB)?
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Old 12-06-2016, 06:44 AM   #11
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You can get the CESG for more than one account. The difficulty in doing this is that you have to be careful not to exceed the limits and I'm not sure about how easy that will be to track and maintain going forward. So "on the way in" that isn't a big deal. You will want to be cognizant about the amount of grants received for when its time to withdraw the funds.

In general, I think its easiest to just have one RESP set up. It makes tracking it easier and keeps everything in one place. I'm not sure what advantages there are to having more than one open, and there isn't anything precluding you from having more than one that I'm aware of though.
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Old 12-06-2016, 09:22 AM   #12
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When I was a punk kid that didn't know anything, I signed up for about 1000 a year with CST. It costs a bunch of money to get out of this, so I'll keep paying into it, but I want to top up my grants, so I'm starting up a new RESP.
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Old 12-06-2016, 09:33 AM   #13
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^ Oh, gotcha. I was obviously thinking of "normal" RESP plans and not the CST version. At that point there is a definite advantage to keeping it in place!
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