arrow22 Comments
  1. Echo
    May 04 - 10:42 pm

    Very clear and concise post Mike. I still don’t fully understand all of the nuances of the RESP, but as you said I don’t really have to unless I’m maxing it out or getting ready to withdraw funds.

    I’ve seen a lot of those scholarship plans being sold at tradeshows with an “enter to win” contest. They’ve always seemed a bit sketchy to me.

  2. Mike Holman
    May 04 - 11:27 pm

    Thanks Echo. The scholarship plans are not a very good option compared to the self-directed plans.

  3. Sustainable PF
    May 05 - 8:04 am

    Thanks for posting about this Mike. We’ve had enough other baby-stuff to think about I hadn’t gotten to your site to read all about RESPs yet (we’ve been using the Baby Expenses section though!) but we definitely want to learn more about RESPs. Part of me wants to help our kids (and loves the government contribution!) but I also know I learned a TON by having to take on some debt to get my own education …

  4. AKA
    May 05 - 9:25 am

    “Reduce the amount of equities in the account as the child gets closer to school.”

    Is this an actual rule, or is it merely a recommendation? In a self directed plan, it seems to me that this would be the latter.

  5. Mike Holman
    May 05 - 9:40 am

    @Sust PF – Don’t worry about RESPs now – just get through the birth. :)

    Good point about helping students financially – Do you hurt them by paying for everything? I don’t know.

    @AKA – Just a recommendation.

  6. Canadian Capitalist
    May 05 - 9:59 am

    @Echo: I’m not a huge fan of Group RESPs either. Once you set it up, RESPs don’t have much maintenance. It makes no sense to me to pay thousands of dollars in fees for RESPs. But then, I’m a DIY investor.

    @Sustainable PF: You don’t have to tell the kids that they have RESPs set up for their education! We are planning on covering some portion of their university costs for their undergraduate education. After that, they are on their own.

    @AKA: It’s a thumb rule really. If a child is going to be tapping the RESP for her education, it should hold relatively low risk assets.

  7. Paul G
    May 05 - 4:56 pm

    Anyone have any thoughts on Universitas Trust funds for an REEE ?

    I’ve looked through their prospectus and the costs and benefits of active management seem to even out (ie, their costs are pretty close to their advantage over the index) – but I’d love to know if anyone else has looked into them and came up with some interesting conclusions.

  8. Heather I
    May 05 - 6:12 pm

    I wanted to thank you for all of your articles on the RESP- it really helped me in deciding to go for the TD efunds for my child and so far, so good….I really appreciated all the online assistance :)

  9. [...] I wrote a guest post over at Canadian Capitalist called RESP Primer – Just the rules you need to know. [...]

  10. G
    May 05 - 10:56 pm

    If you are thinking about setting up self-directed RRSPs: BMO Investorline allows joint Subscriber RESP accountd. RBC Direct investing only allows single subscriber accounts. I recently transferred my account from BMO IL to RBC DI so I know. It wasn’t a big deal for me but it’s good to know about it. My 2 cents..

    • Canadian Capitalist
      May 08 - 1:15 pm

      @G: I believe the RESP accounts set up with TD Mutual Funds for our kids are joint subscriber accounts. I should check though.

  11. G
    May 05 - 10:58 pm

    .. sorry I ment to say self-directed RESP’s not RRSP’s. Ah so many abbreviations

  12. [...] Canadian Capitalist gives us just the rules we need to know with an RESP primer. [...]

  13. [...] parents.InvestingCanadian Capitalist had Money Smarts Blog post a really great article on an RESP Primer – Just the Rules You Need to Know.  More great content from two 2011 Top (Echo again, if I recall) wrote about [...]

  14. Dave
    May 08 - 10:15 am

    I have a RESP for my Grandson. What happens when a subscriber dies before the child goes on to post secondary education ?

    • Canadian Capitalist
      May 08 - 1:12 pm

      @Dave: Here’s a Toronto Star column that should help you. In general, RESPs are properties of the subscriber and would become part of the subscriber’s estate. The following column should help you understand what happens:

  15. Mike Holman
    May 08 - 1:35 pm

    @Dave @CC In general, I feel it’s best if the parent is the subscriber of the account. The fact is that the subscriber owns the money and is under no obligation to pay anything to the student if they choose not to.

    A relative or friend might have good intentions when setting up an account for your child, but a lot can happen over 17+ years and those intentions might not result in any of that money going to the child.

    Of course, if the parent is a financial train wreck – the child might be better off if a non-parent is the subscriber. :)

  16. G
    May 09 - 12:36 am

    There is no contribution room accrued in years prior to 1998.
    So if your child is 18 this year, he/she was born in 1993. His/her maximum lifetime grant is $5,600

  17. G
    May 09 - 12:44 am

    I should have said that no contributions made prior 1998 were “grant eligible” even though I think RESP’s existed prior to 1998.
    In other words your child can get full $7,200 in grant money only if he/she was born in 1998 or later

  18. chuck
    Sep 09 - 3:09 pm

    Hi, Thanks for all the great info. I have been putting 2500-3000 per year in my daughters resp for 13 years now. She is 17 and I understand the last CESG will be December of this year. Looking at my most recent statement it appears that our total CESG lifetime will be $6600. Is there anything I can do now to gain the addition $600?

  19. Canadian Capitalist
    Sep 10 - 1:13 pm

    @chuck: I don’t think you can do anything because your child was born in 1995 and CESG accrues from 1998 onwards. So,

    1998-2006 = 9 * $400 = $3,600
    2007-2012 = 6 * $500 = $3,000

    Total = $6,600

  20. Prem Sundar-Kolish
    Feb 08 - 5:56 pm

    My daughters dad took an RESP account for my daughter in 2006 while we married and lived together in BC. The financial advisor was his brother and the money was invested with Investia and Fidelity. My daughter and I live in Saskatchewan and her dad passed away in 2012. The brother was made the trustee, I was told by the brother that I could make contributions on the RESP, but upon talking to Head office of Investia Financial, was told the account was frozen. They will not send me a statement for the RESP and the other account for an RRSP.

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