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

[Slava]

I think so. It's really never happened in any account I have dealt with, so it's not something I have considered. I don't know if it work different than what you're saying here, just that I can't think of a single person who has been in that position with me.

As you note the money is taxable to the beneficiary as well, so the taxes are basically a non-factor because the beneficiary has tuition and other education deductions to put against it.

[darklord700]

Originally Posted by Slava

I think so. It's really never happened in any account I have dealt with,

Yeah, it's more of a hypothetical question. You'll hope after all these years, your RESP investment would never be in a loss position.

[Slava]

Originally Posted by darklord700

Yeah, it's more of a hypothetical question. You'll hope after all these years, your RESP investment would never be in a loss position.

Yeah and it really never should be at roughly 18 years. Its not something you would try for because I think that the "savings" in this hypothetical scenario are non-refundable tax credits and you would be saving something like $187 and losing $500 to make that happen. You would want to clarify that point with an accountant before you take my word for it, but that is what I think is happening here.

[MoneyGuy]

Originally Posted by darklord700

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?

Originally Posted by Slava

I think so. It's really never happened in any account I have dealt with, so it's not something I have considered. I don't know if it work different than what you're saying here, just that I can't think of a single person who has been in that position with me.

As you note the money is taxable to the beneficiary as well, so the taxes are basically a non-factor because the beneficiary has tuition and other education deductions to put against it.

If growth is negative, withdrawals come out of the original capital. Grant amounts are not affected.

So, $500 goes back to the government, and the contributor can do a return of capital on anything that remains.

The same would apply if the account had grown $1,000 instead. The grant is returned to government and the return of capital and growth can be withdrawn (note that if growth is not transferred to an RRSP there is a 20-per-cent penalty on top of any taxes that may apply).

If there is a possibility of future contributions, my advice would be to pull out everything except the grant and see if it grows in the future.

Also, if there is negative growth over many years, you might consider firing your advisor. Just sayin'.

[ranchlandsselling]

So one kid was born September of 2014. I'm just getting around to this now and assuming I haven't missed out on anything.

I'm opening a self-directed RESP for my kid with Scotia Itrade.

I've filled out the account info / application with scotia and with that a:
Basic Canada Educations Savings Grant form
Additional Canada Educations Savings Grant
Canada Learning Bond
Application for Alberta Centennial Education Savings Plan Grant

Am I missing anything?

Now to open the account I need to send $2,500 (max?) into the Scotia account every year? So I could send the first cheque to open the account and the second check on the birthday of the kid in 2015?

Anything else I need to do?

Thanks!

[Coach]

Looks like you're good ranchlandselling

You don't NEED to contribute $2500/year, that is just the amount to maximize the government grant. Obviously, that is recommended, but it's not necessary to keep the account open or anything.

Those ACES grants ($500) are done as of the end of July, so make sure you get that applied for before then.

[bizaro86]

How long did it take for people to see their ACES from Alberta and matching grant from the Federal Gov't in their account? I'm getting antsy, but I want to invest all the money at once so I only pay one commission.

[Coach]

Originally Posted by bizaro86

How long did it take for people to see their ACES from Alberta and matching grant from the Federal Gov't in their account? I'm getting antsy, but I want to invest all the money at once so I only pay one commission.

It won't happen until June. Likely not until mid-June.

[bizaro86]

Originally Posted by MattyC

It won't happen until June. Likely not until mid-June.

Does everyone get the match all at once?

[Coach]

That's my understanding, yes.

[Slava]

It really depends on the provider though. A lot of institutions do the grants at month end, so in that case you see the grants then. If you invest right close to the end of the month it might take until the following month (they might have a cutoff date).

[Coach]

^^^ Agreed. You should speak to someone at Scotia who can tell you when the grants will be paid.

[Coach]

We had a bunch that got paid on June 1st, not all though.

[ranchlandsselling]

Originally Posted by ranchlandsselling

So one kid was born September of 2014. I'm just getting around to this now and assuming I haven't missed out on anything.

I'm opening a self-directed RESP for my kid with Scotia Itrade.

I've filled out the account info / application with scotia and with that a:
Basic Canada Educations Savings Grant form
Additional Canada Educations Savings Grant
Canada Learning Bond
Application for Alberta Centennial Education Savings Plan Grant

Am I missing anything?

Now to open the account I need to send $2,500 (max?) into the Scotia account every year? So I could send the first cheque to open the account and the second check on the birthday of the kid in 2015?

Anything else I need to do?

Thanks!

Okay, so I moved the $2,500 today. Kid is 9 months old, 1 in September. So that I'm not moving $2,500 at once again when do I start the payment plan so $104 is going bi-monthly or $208 monthly? I don't think I can do it today.

Also given the termination of one of the grants is the maximum amount smaller now? I'm happy contributing, but only doing the maximum so I get the most matching. If the matching is now reduced I don't feel the need to contribute the maximum (hope that made sense).

Thanks!

[Slava]

^ I'm not totally sure that I understand what you mean? The total grants aren't reduced by your contributions though. The CESG will give you 20% of your contributions each year up to that maximum of $500 in your case. That grant comes from the federal government. The grant that is soon to be discontinued (at least it was set under the PC's and I haven't heard otherwise at this point under the NDP) is the provincial ACES grant.

I'm almost sure that the year for these programs represents the calendar year; so if you did the $2,500 in 2015 you might want to wait until 2016 to take advantage of the resulting match from that. To be totally sure though you should give a call to your provider and confirm that with them.

[ranchlandsselling]

Originally Posted by Slava

^ I'm not totally sure that I understand what you mean? The total grants aren't reduced by your contributions though. The CESG will give you 20% of your contributions each year up to that maximum of $500 in your case. That grant comes from the federal government. The grant that is soon to be discontinued (at least it was set under the PC's and I haven't heard otherwise at this point under the NDP) is the provincial ACES grant.

I'm almost sure that the year for these programs represents the calendar year; so if you did the $2,500 in 2015 you might want to wait until 2016 to take advantage of the resulting match from that. To be totally sure though you should give a call to your provider and confirm that with them.

Okay, thanks!

Basically I thought that the one that was being cancelled was the one that matches 20% up to a max of $500 hence the $2,500 I tossed in today. I then wondered what I should be contributing in the next year given the cancellation of the above referenced matching program being cancelled (which I now know it isn't).

So the one cancelled (pending NDP changing something) was just a one time $500 shot as long as I opened the account by July 1? And with that being the case, the goverment will still match 20% up to a max of $500 so I should keep giving $2,500 per year?

My other part was I donated $2,500 today. When can I start again? The day the kid turns one, or Jan 1, 2016?

[Slava]

Originally Posted by ranchlandsselling

Okay, thanks!

Basically I thought that the one that was being cancelled was the one that matches 20% up to a max of $500 hence the $2,500 I tossed in today. I then wondered what I should be contributing in the next year given the cancellation of the above referenced matching program being cancelled (which I now know it isn't).

So the one cancelled (pending NDP changing something) was just a one time $500 shot as long as I opened the account by July 1? And with that being the case, the goverment will still match 20% up to a max of $500 so I should keep giving $2,500 per year?

My other part was I donated $2,500 today. When can I start again? The day the kid turns one, or Jan 1, 2016?

Yeah you have the grant portion right. Its the one time $500 grant if the child was born after 2005, and then they also received $100 when they turn 8, 11 and 14 (which is also being cut). The grant from the federal government remains and they match 20% technically up to $1000 if you haven't contributed every year. If you have hit the maximums though they match up to $500....so in your case its the $500.

Like I say I believe that they run these on a calendar year so if you plunked in the $2500 today you will be looking at 2016. I would confirm that.

[ranchlandsselling]

Originally Posted by Slava

Yeah you have the grant portion right. Its the one time $500 grant if the child was born after 2005, and then they also received $100 when they turn 8, 11 and 14 (which is also being cut). The grant from the federal government remains and they match 20% technically up to $1000 if you haven't contributed every year. If you have hit the maximums though they match up to $500....so in your case its the $500.

Like I say I believe that they run these on a calendar year so if you plunked in the $2500 today you will be looking at 2016. I would confirm that.

Part 1 - thanks!

Part 2 (bolded)- So... Assuming it's calendar year I've missed nothing. And assuming it's life years of the beneficiary I've missed nothing and could technically start after the first birthday. I'll obviously check.

Soo, if the lifetime contribution limit remains at $50,000 I've got twenty years of $2,500 contributions and a cumulative $10,000 of matching potential?

[Slava]

Originally Posted by ranchlandsselling

Part 1 - thanks!

Part 2 (bolded)- So... Assuming it's calendar year I've missed nothing. And assuming it's life years of the beneficiary I've missed nothing and could technically start after the first birthday. I'll obviously check.

Soo, if the lifetime contribution limit remains at $50,000 I've got twenty years of $2,500 contributions and a cumulative $10,000 of matching potential?

Well no, the maximum CESG is $7,200 per lifetime and that amount was calculated on the "old" limit of $2000 per year contribution max and the 20% of that for 18 years. I haven't seen anything that has increased that amount, even since 2007 when they increased this annual amount to $2500/$500 for the grant. So basically once you hit that $7200 you aren't going to get more CESG.

[bizaro86]

Do you get CESG on the ACES, or only on your own contributions?