Comments on: RESP Basics

By: TD e-Series Accounts Not Very Hard to Set Up | Canadian Capitalist

TD e-Series Accounts Not Very Hard to Set Up | Canadian Capitalist — Wed, 11 May 2011 02:55:44 +0000

[...] who has invested in TD e-Series Mutual Funds both through a brokerage account at TD Waterhouse and my kids’ mutual fund RESP accounts, I’m somewhat mystified by the flak these funds sometimes receive. In a recent column, Globe [...]

By: MikeinVictoria

MikeinVictoria — Thu, 10 Mar 2011 17:20:11 +0000

Hi CC thanks for the terrific site. Yet another RESP question. I have a CST RESP for my first born who is now almost nine. The plan has been in effect since 2002 and is worth $17,782 with $3600 of enrollment fees. We started the plan when our finances were very tight and we knew we needed to be forced to save.

Now i have another child who is 4.5 and i haven’t started saving for her, and a we have a baby on the way. Having equal funds for all three is important to me, though who can see into the future. We have some retirement savings thanks to my having been employed by the federal public service for 10 years. I will be receiving a transfer of the future value of my pension soon of about $85k. My husband’s defined contribution plan has about $20k. Thehouse is a long way from paid for.

The question is, should i continue with the CST for the firstborn or stop? Should I open a family RESP for the other two children? There isn’t a whole lot of cash flow, so i’m leaning toward stopping for the firstborn and using that ($171 a month plus another couple hundred) to fund the RESP for the other two. I’m feeling that the grant money is too good to miss. But i’m not really qualified to do self directed anything…

I’d appreciate your thoughts.

By: iktidar

iktidar — Fri, 18 Feb 2011 06:37:28 +0000

@Lainie. Whether to stay or leave is a tricky situation. Having stayed in it for 3 years you basically stand to lose 9 months of contribution by breaking the plan, that may be a huge hit depending on how much you are contributing per month. You can setup a separate family plan elsewhere, having more than one RESPs for a child is allowed so, you could keep the IA going in parallel.

Reference: http://www.cra-arc.gc.ca/tx/rgstrd/resp-reee/fq-eng.html

One more thing, stay away from the scholarship type plans. Its a high commission product so is often positioned as a great product by reps who either don’t know any better or are looking to increase their unit of sale. For my experience with scholarship plan you can refer to some of my comments above.

For choosing an RESP provider you can refer to the following link
http://www.canlearn.ca/eng/saving/resp/provider.shtml

There is also good information shared by others in notes above.

By: Lainie

Lainie — Fri, 18 Feb 2011 05:15:15 +0000

@Iktidar: Thanks for your response. Unfortunately, when I had set up my older child’s Diploma RESP, I had purchased it from IA through a family member and i was rather ignorant at that time, of the fees and the penalties attached. Now, with my 2nd child, I was told by my agent that if I do switch within IA to a family plan, I will lose the bonuses accumulated in that plan. You are correct in that the penalty is at the maximum 18 months x 50% of mthly contribution. I am 3 years into that Diploma RESP, do you suggest that I remain in that plan? Also, can I set up another family plan elsewhere and name my 2 children as beneficiaries, and at the same time, keep my account with IA?

By: iktidar

iktidar — Thu, 17 Feb 2011 08:59:51 +0000

@Lainie…..from your description it looks like you have IA Diploma RESP plan. I think the penalty for closing this RESP account is 18 X 50% of the monthly contributions + you are forfeiting the future bonus as well. I hope I got this right, this can be confirmed from the information folder. You should check with your agent if IA waives the penalty if the account is switched within IA. Keep in mind that the MER cost for IA funds is also quite high which can add up over the years.

By: Lainie

Lainie — Thu, 17 Feb 2011 07:03:17 +0000

Hi, I stumbled upon this website discussion while researching on RESP’s for my 2nd child. Has anyone dealt with RESP from Industrial Alliance? I set up my older child’s RESP account with Industrial Alliance but I’m looking into other options for my 2nd child’s RESP. With my older child, I had set up an individual plan but now that i’m considering a group plan with IA, I was told that I would have to forfeit the bonuses that accumulate in the plan if I do choose a group plan. Does anyone know what the penalties/fees are with IA for withdrawing from the plan?

By: Canadian Capitalist

Canadian Capitalist — Wed, 05 Jan 2011 17:18:58 +0000

@John-Paul: The $50 annual fee applies to TD Waterhouse RESP accounts. If you open a TD Mutual Funds account at your local branch and have it converted to a TD e-Series Funds account, there is no annual charge.

I’ve written about the process here:

http://www.canadiancapitalist.com/investing-in-td-e-series-funds-for-your-resp/

By: John-Paul Federico

John-Paul Federico — Wed, 05 Jan 2011 17:06:49 +0000

I was leaning towards investing in TD e-Funds as part of my daughter’s RESP. However, I was discouraged by the $50 annual fee. Is this fee worth paying given the low MERs?

By: Joseph

Joseph — Wed, 08 Dec 2010 21:32:54 +0000

Ahmed..you say you didn’t use the money from the Scholarship Plan your mom had set up for you and lost money. You should have reconsidered going on further to post-secondary education. You might have at least learned how to spell ‘recommend’…duh

By: Canadian Capitalist

Canadian Capitalist — Wed, 17 Nov 2010 22:27:39 +0000

@David: The following Govt. of Canada website has information on which providers support CLB. Many RESP providers do not support CLBs. I see TD Bank in the list but not TD Asset Management or TD Securities:

http://www.hrsdc.gc.ca/eng/learning/education_savings/publicsection/new_promoter_list.shtml