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

[acerbic_1]

Originally Posted by BigNumbers

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

Set it up through your bank - they'll auto debit and you can forget about it until needed. When the time comes, you provide proof of enrollment and they pony up as much as you need.

[Slava]

The matching contribution is from the federal government and that is still in force (which is 20% and larger than this anyway). Free money is free money though!

[fredr123]

We had someone visit our home to explain RESPs to us after our first kid was born like 8 years ago. They explained how there was a list of eligible institutions that didn't include any colleges or trades and that if we didn't use the money for the first kid, all the extra grants and interest were forfeited and couldn't be rolled over for other kids.

Coming from a family where most went into trades or maybe didn't go to school, this sounded like a terrible plan. I've since been told that the RESP person was peddling a terrible product and there are much more flexible plans out there.

With that bad taste still lingering in our mouths some 8 years later, how can I convince my wife to give these things another chance?

[bomber317]

Originally Posted by Slava

The matching contribution is from the federal government and that is still in force (which is 20% and larger than this anyway). Free money is free money though!

When does the money get deposited for

Federal grant?
Alberta grant?

I'm assuming federal is end of year as they wait until then to calc your RESP contributions?

[Slava]

Originally Posted by fredr123

We had someone visit our home to explain RESPs to us after our first kid was born like 8 years ago. They explained how there was a list of eligible institutions that didn't include any colleges or trades and that if we didn't use the money for the first kid, all the extra grants and interest were forfeited and couldn't be rolled over for other kids.

Coming from a family where most went into trades or maybe didn't go to school, this sounded like a terrible plan. I've since been told that the RESP person was peddling a terrible product and there are much more flexible plans out there.

With that bad taste still lingering in our mouths some 8 years later, how can I convince my wife to give these things another chance?

Well its kind of difficult to say what would work to convince her, but I can tell you that the list of schools and institutions in general is very wide. I can't think of any exclusions off the top of my head and I haven't ever run into an issue for a client. That isn't to say that there are no limits, just that I can't think of a program that someone has wanted to attend that doesn't qualify.

Originally Posted by bomber317

When does the money get deposited for

Federal grant?
Alberta grant?

I'm assuming federal is end of year as they wait until then to calc your RESP contributions?

The grants are deposited at the end of the month actually. So you aren't actually just getting the grants but also the compound growth on those grants through the years as well. If you put in $100 a month at the end of the month there is a separate transaction for the $20 from the government. In the case of the Alberta grants you also receive them at the end of the month.

[fundmark19]

Originally Posted by 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

We really need to do this before the deadline approaches! We are moving back to the city so should be easier finding a time now as well!

[Slava]

Originally Posted by fundmark19

We really need to do this before the deadline approaches! We are moving back to the city so should be easier finding a time now as well!

You know where to find me!

[Fighting Banana Slug]

Originally Posted by fredr123

We had someone visit our home to explain RESPs to us after our first kid was born like 8 years ago. They explained how there was a list of eligible institutions that didn't include any colleges or trades and that if we didn't use the money for the first kid, all the extra grants and interest were forfeited and couldn't be rolled over for other kids.

Coming from a family where most went into trades or maybe didn't go to school, this sounded like a terrible plan. I've since been told that the RESP person was peddling a terrible product and there are much more flexible plans out there.

With that bad taste still lingering in our mouths some 8 years later, how can I convince my wife to give these things another chance?

We are in the same boat with my stepson who is now enrolled in university. Many, many ridiculous rules, penalties and fees that were not clearly explained to my wife when she set it up, some 18 years ago. I am sure the rules were set out in the fine print, but it has been a disaster, as the scheduled date of entry into school was off (January and not September?) and numerous forms needed to be filled out. We are still waiting on the first round of funding, which requires 2 months notice and then they have another 2 months to actually do something! I basically feel this type of fund is a scam. Go to a bank or talk to someone like Slava, who seem to actually understand how this stuff should work.

[Slava]

Originally Posted by Fighting Banana Slug

We are in the same boat with my stepson who is now enrolled in university. Many, many ridiculous rules, penalties and fees that were not clearly explained to my wife when she set it up, some 18 years ago. I am sure the rules were set out in the fine print, but it has been a disaster, as the scheduled date of entry into school was off (January and not September?) and numerous forms needed to be filled out. We are still waiting on the first round of funding, which requires 2 months notice and then they have another 2 months to actually do something! I basically feel this type of fund is a scam. Go to a bank or talk to someone like Slava, who seem to actually understand how this stuff should work.

It does depend on how the program is set-up, but for most plans you shouldn't have this kind of hassle. The plans I set-up are not based on receipts or anything like that and you can specify how you want to have the withdrawals take place (you can take the grants first for example which has certain advantages). Basically you provide proof that the student is enrolled, say how much you want to take out, sign a couple forms and its done.

[Coach]

Originally Posted by calf

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

It's not a huge deal, as it's only a max of $800/kid total.

Organizing your RESP contributions to maximize grant is your more lucrative and important endeavor.

Although, as said many times, free money is free.

[Fighting Banana Slug]

Originally Posted by Slava

It does depend on how the program is set-up, but for most plans you shouldn't have this kind of hassle. The plans I set-up are not based on receipts or anything like that and you can specify how you want to have the withdrawals take place (you can take the grants first for example which has certain advantages). Basically you provide proof that the student is enrolled, say how much you want to take out, sign a couple forms and its done.

That certainly makes more sense, but honestly, we have had nothing but the run-around as to how the monies are paid out. From what I can gather, there is no optionality as to how you receive the funds. Essentially we receive the principal payments in year 1 and the interest/investment income and grant money in the following years. That money appears to be pooled with the group, so if some of the group doesn't qualify, more is paid out to those that do. It honestly feels scam-ish to me, as they have yet to provide me with an accounting of what I can actually expect to recieve (other than the principal).

[albertGQ]

Originally Posted by Fighting Banana Slug

That certainly makes more sense, but honestly, we have had nothing but the run-around as to how the monies are paid out. From what I can gather, there is no optionality as to how you receive the funds. Essentially we receive the principal payments in year 1 and the interest/investment income and grant money in the following years. That money appears to be pooled with the group, so if some of the group doesn't qualify, more is paid out to those that do. It honestly feels scam-ish to me, as they have yet to provide me with an accounting of what I can actually expect to recieve (other than the principal).

I know its too late now, but you should have contacted Slava.

Or my buddy Victor Lough. Both are equally good.

[Fighting Banana Slug]

No doubt, my ranting is just a warning to others. Seems pretty clear that not all RESPs are equal.

[calf]

Originally Posted by MattyC

Although, as said many times, free money is free.

Mainly this.

It's my money, give it back.
It's my money, give it back.
etc.

[undercoverbrother]

Thanks for bumping this thread Slava

[darklord700]

I have a general question about RESP. Suppose I contribute $2500 and get a $500 grant.

And subsequently, that investment losses $500, where will that loss come out off when I withdrawal the funds?

Does it mean my contribution goes down by $500 and the $500 grant will be taxed in the hand of the beneficiary or vice versa? Or will the loss be pro-rated between grant and my contribution? Thanks.

[Slava]

Well actually when you withdraw funds you can distinguish between withdrawing the grant money and withdrawing the contributions. Theoretically you could withdraw the grant money and have that come out of the contributions...although I have never been in that situation so I'm not 100% sure. I should note that as others have specified in this thread their providers don't seem to allow that specification, so maybe it needs to be said that your mileage may vary.

The only time that would be a concern though is if you were withdrawing after completing the education withdrawals (or electing not to do the education withdrawals).

[darklord700]

Originally Posted by Slava

Well actually when you withdraw funds you can distinguish between withdrawing the grant money and withdrawing the contributions.

If that's the case, then it'll be advantageous to designate the withdrawals from contributions as it is tax free if you know your investment has incurred losses.

[Slava]

Originally Posted by darklord700

If that's the case, then it'll be advantageous to designate the withdrawals from contributions as it is tax free if you know your investment has incurred losses.

I'm not sure I follow? In general if you take the withdrawal as grants though that is the best for a few reasons. First of all if your child doesn't use all the money for one reason or another you keep the remainder, whereas remaining grant money is clawed back.

The RESP is tax sheltered in general though, so gains and losses aren't taxed as they accrue. I think that's the point you're driving at in your comment, but I'm not sure.

[darklord700]

Originally Posted by Slava

I'm not sure I follow? In general if you take the withdrawal as grants though that is the best for a few reasons.

Correct me if I'm wrong, withdrawals from grants and growth are taxable, albeit in the hands of the beneficiary but contributions can be withdrew tax free.

Therefore, if your RESP investment is in a loss position, you would want to designate the losses as coming out from grants (there'll be no growth to speak off in this case).

Say, you have contribution of $2500 and grant of $500, you suffer a loss $500 and you want to withdraw $2500, what would you do?

My theory is you desginate the $2500 withdraw form contributions. If you designate say, $2000 from contributions and $500 from grants, you still have $500 that is taxable, am I right?