Have you been putting off an RESP? It could cost you $500!

[Slava]

One of the overlooked parts of the recent Alberta budget is the phasing out of the ACES (Alberta Centennial Education Savings) grant for RESPs. This grant gives $500 to all children born in Alberta in 2005 and later.

While no dates have been announced for the phase out at this point, if you have been delaying setting up an RESP, you ought to act soon. This is basically free money for your childs education! There are also $100 grants in this program for children turning 8, 11 and 14. If you have kids that meet these criteria, you will want to look into this sooner rather than later to avoid missing that cut-off date when its announced.

There is some additional information on eligibility and such here: http://eae.alberta.ca/funding/aces.aspx

If you have any questions please feel free to post here I can do my best to answer them, or PM me if you like.

(I get that this is pseudo-political as it involves the provincial budget, but if we could leave that discussion for another thread it might be better for everyone!)

[TurdFerguson]

Not directly related, but I was just thinking about my RESPs this morning in he shower (where the most productive thoughts of the day are formed). Are RESP contributions tax deductible like RRSP contributions? I've always thought they were not as the money is not taxed when it is withdrawn...

[Ironhorse]

Does the RESP have to done at the same institution as any others RRSPs?

[Slava]

Originally Posted by TurdFerguson

Not directly related, but I was just thinking about my RESPs this morning in he shower (where the most productive thoughts of the day are formed). Are RESP contributions tax deductible like RRSP contributions? I've always thought they were not as the money is not taxed when it is withdrawn...

No they're not tax deductible like an RRSP. The funds are taxable when withdrawn, but in the hands of the student so they have things like tuition to go against them and will almost surely pay little to no tax as a result.

You also have options like moving them to your RRSP down the line if the kids don't go to school (not the grant portion), in which case the tax considerations change accordingly.

Originally Posted by Ironhorse

Does the RESP have to done at the same institution as any others RRSPs?

No, you can have them elsewhere.

[Knut]

Originally Posted by Slava

No they're not tax deductible like an RRSP. The funds are taxable when withdrawn, but in the hands of the student so they have things like tuition to go against them and will almost surely pay little to no tax as a result.

You also have options like moving them to your RRSP down the line if the kids don't go to school (not the grant portion), in which case the tax considerations change accordingly.



No, you can have them elsewhere.

The Grant Portion is clawed back by the government if the child does not go to school i think.

Everyone should set one of these up. We pay into it, and then put any money my family gives my son into it as well. Basically max it out every year and therefore get the max grant out of it. Essentially we will have over $90,000 saved for him by the time he is 18.

[TurdFerguson]

Originally Posted by Hesla

The Grant Portion is clawed back by the government if the child does not go to school i think.

Everyone should set one of these up. We pay into it, and then put any money my family gives my son into it as well. Basically max it out every year and therefore get the max grant out of it. Essentially we will have over $90,000 saved for him by the time he is 18.

Totally agree. I think we put $209 a month/kid in and that enables us to max the grant benefit out.

[Slava]

Originally Posted by fotze

Its been a while but the ACES is just a one time amount, correct.? Not a yearly grant like the typical RESP?

Right, one time and then at 8,11 and 14 as I mentioned above.

[Ruttiger]

Was talking with someone the other day and she mentioned an alternative to an RESP was a form of life insurance (can't remember which type exactly) as it offered greater flexibility, etc. Can you shed any light on this?

[Slava]

Originally Posted by fotze

The $100 hardly seems worth it when you consider everyones time filling out all the annoying forms.

I don't know what to do if the kids don't go to school. My kiddies have a big inheritance in their savings that I would rather they do not know about until they are no longer ######ed at around age 25.

Does the school have to meet some minimal standards? Can it only be spent on tuition? Living expenses? i.e. can they go to clown college/DeVry and the money can be spent on an apartment near clown college?

Well RESPs are a program where there are no strings attached in the sense that you don't have to provide receipts or anything like that. So if your child is enrolled and provides proof of enrolment you don't have to take out the same amount for tuition and costs; if the tuition is say $5000 and you just withdraw $15,000 that's your decision.

Its also important to note that the account is really the person opening the account to control. So while I have an RESP for the kids, if my kids are 15-16 years old, been to jail three times and failing out of high school, aside from dealing with a cranky old man who would like to knock some sense into them, they won't be collecting a dime of that RESP! There are options here.

Originally Posted by Ruttiger

Was talking with someone the other day and she mentioned an alternative to an RESP was a form of life insurance (can't remember which type exactly) as it offered greater flexibility, etc. Can you shed any light on this?

Well an insurance policy could be used for these types of things and would almost surely be a whole life plan that builds up a cash value. There is more flexibility in the sense that you could withdraw funds for purposes other than just education. You wouldn't get the government grants here though, and that along with the growth on the grants can be significant over the years.

There are benefits to these other ideas though, as long as you're willing to fund them and understand in advance what you're getting into.

[BigNumbers]

I need to open an RESP for my little ones. Can anyone recommend a good person in Calgary to deal with?

[Table 5]

Yeah, the guy who started this thread.

[Sliver]

Originally Posted by TurdFerguson

Totally agree. I think we put $209 a month/kid in and that enables us to max the grant benefit out.

Lol I do the same amount for my kids... the minimum amount to get the maximum contribution from the government.

Good thread, Slava. Never say no to free money, people.

[fundmark19]

Any word on aces grant cancelation date yet? Baby is coming in next couple months and I'm hoping to get free money

[chemgear]

Originally Posted by fundmark19

Baby is coming in next couple months and I'm hoping to get free money

Want free money with a new baby - you're doing it wrong?

Seriously though, with how much it is going to cost in the long run I can totally see why you'd want as much money as possible.

Congrats in advance!

[Sylvanfan]

A word of advice to those who have 5000 to start a RESP....do 2500 now, than 2500 the next year to take advantage of the matching. Not like some idiot who put the full amount in on December 30th....and found out later I missed out on $500 because I didn't wait 3 days nd split the amounts. This ladies and gentleman is how to be a poor schmuck.

[CarlW]

Originally Posted by Slava

Well an insurance policy could be used for these types of things and would almost surely be a whole life plan that builds up a cash value. There is more flexibility in the sense that you could withdraw funds for purposes other than just education. You wouldn't get the government grants here though, and that along with the growth on the grants can be significant over the years.

There are benefits to these other ideas though, as long as you're willing to fund them and understand in advance what you're getting into.

I suppose the person could be also talking about Universal Life, maybe paid up in 10 or 20 years or something that still does have some guaranteed cash values, but also having the tax sheltered investment portion of it.

Have also seen a limited pay Critical Illness touted with return of premium option where you get to protect your child from Critical Illness insurance for, but if they don't need it you give up the policy and use the saved up premiums returned to you as tuition fees/starting up TFSAs for the child or whatever.

[Slava]

Originally Posted by fundmark19

Any word on aces grant cancelation date yet? Baby is coming in next couple months and I'm hoping to get free money

No, I guess they're reviewing the program at this point. I can only guess that they'll give some notice, but I have no idea.

Originally Posted by Sylvanfan

A word of advice to those who have 5000 to start a RESP....do 2500 now, than 2500 the next year to take advantage of the matching. Not like some idiot who put the full amount in on December 30th....and found out later I missed out on $500 because I didn't wait 3 days nd split the amounts. This ladies and gentleman is how to be a poor schmuck.

You can put $5000 and get $1000, if you are contributing for a back year though. In other words if you have some years where you didn't contribute and are contributing for two years, you can get the grant for that figure.

[Slava]

Thought that I would bump this thread because you have a limited amount of time now to complete this. If you have put this off, you basically have until the end of July at which point the program is over: http://eae.alberta.ca/funding/aces.aspx

[calf]

Seems too that children born today onward arent eligible either. As someone with a child coming in the next few months, this sucks.

[Flamesoholic]

Slava, if we already have RESPs set up before this deadline will we still continue to get the matching gov't contributions or is that ending too?