how does one calculate the amount needed to catch up on RESP contributions so that we can get maximum possible CESG grant up until this year?
so I have a 6 year old kid and no resp has been done.
how much should i put in this year to get all the cesg grant for past years?
I believe there is no max annual contribution any more but max basic cesg per year is $500.
So should I contribute 6*2500 = 15,000 to get max cesg?
The lifetime max contribution is $50,000 which can be done in a year, so there is a max per year.
Quote:
Originally posted by NewDesiInTown
how does one calculate the amount needed to catch up on RESP contributions so that we can get maximum possible CESG grant up until this year?
so I have a 6 year old kid and no resp has been done.
how much should i put in this year to get all the cesg grant for past years?
I believe there is no max annual contribution any more but max basic cesg per year is $500.
So should I contribute 6*2500 = 15,000 to get max cesg?
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Quote:
Originally posted by NewDesiInTown
how does one calculate the amount needed to catch up on RESP contributions so that we can get maximum possible CESG grant up until this year?
so I have a 6 year old kid and no resp has been done.
how much should i put in this year to get all the cesg grant for past years?
I believe there is no max annual contribution any more but max basic cesg per year is $500.
So should I contribute 6*2500 = 15,000 to get max cesg?
Actually the RESP grant goes backwards.
The contribution of $5000 this year gets you the grant from 2008.
The cont of $5000 next year(2010) gets you the grant of 2007
The Cont of $5000 in 2011 gets you the grant of 2006(only $400 that year)
and backwards till 2003/2002.
6 year old born in Oct 2002 is still 6 years old which is why I have included 2002, since you have not specified the birthdate.
Also there are good scholarship plans out there so don't know why you are being warned away from them.
Also since the lifetime tops is $50,000 and you still have 12 years to contribute, maybe after the first two years to get your max CESG, you might want to consider dropping it to $4,500 to get your past CESG as then you will be in 2006 territory when the 'max' contribution was $2,000 and the CESG was $400.
Then when you get all the way down to 2002/2003 you can contribute $2,500 or whatever is the tops for grant at that time.
Over contribution at that time should be evaluated then
Many people used to over contribute into the RESP for tax free growth of money but this year they will contribute only $2,500 and the over contribution will go into a TFSA- prudent measure in my opinion.
By over contribution I mean what is not eligible for grant because you get grant only on $2,500 even if you put $4,000 in an RESP if there is no catching up to do, which is also why 'max' is within apostrophes
Hope all this info is not confusing.
Many thanks investpro, Pramod Chopra and rsbagwell.
so just to keep things simple for a child born in 2003 and with no RESP yet, if I contribute $5000 starting from this year, I should be able to recover the max cesg grant over the next 6 years and also get max eligible grant each year.
After 6 years, I can drop the annual contribution to 2,500 and get the max grant (assuming rules stay the same).
Is that correct?
regarding group plans, i have read more on them and I have no interest in those.
I once almost got duped by a CST or UT salesperson fortunately i didn't sign up.
I plan to do a self-directed plan at my bank (TD).
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