RESP..yes/no
Jump to Page:
< Previous [ 1 ] [ 2 ] [ 3 ] [ 4 ] [ 5 ] [ 6 ] [ 7 ] [ 8 ] [ 9 ]
Posted on: 11-01-05 15:20:37
Quote:
Orginally posted by Pramod Chopra
Quote:
Orginally posted by atyagi
Chandresh,
By the time the elder 3+ turn 18, He will get 131K(I took the RESP just after he was born). And for the younger one he will be getting 75K. Thats what is written in the yearly statement what one gets at the year end.
Abhishek,
Its good to note that you have taken RESP's plans for both kids from their early age to get the benefit of compound growth and CESG for full 18 years. However, please let us know if the return ($131K) on the maturity of the plan you are going to get is guaranteed? Does the yearly statement show this $131 k as guaranteed maturity value OR simply a projected value based on some hypothetical interest rate? Because, what I could understand that if you are investing $2000 annually and maximizing the CESG grant, you have to continuously get more than 10% return every year in order to get that maturity value.
Please clarify.
$2000 invested along with $400 grant on the 1st of each year compounded at 12% for 17 years comes to 131,399 (out of which about 26.3k is the interest for the last two years!)
If someone can guarantee that to me - I am ready to take that investment immediately!
Chandresh
-----------------------------------------------------------------
Chandresh
Advice is free – lessons I charge for!!
The assumed maturity value of RESP is always calculated on a hypothetical return but it need to be realistic based on present market return. In this case it seems be a much higher return. However, the average return in last several for RESP industry stays in between 7-8%.
Also note that all RESP companies has to invest in similar instruments as prescribed by National Policy #15. Therefore rate of return would be same for all RESP companies. Be careful ans ask for more info from the company. These are projected figures.
-----------------------------------------------------------------
Live and Let Live. Together we can make a difference.
DP JAIN, CPA, CGA, CPA (US), CA(I), LL.B.(I)
416-305-0080
(Loans, Mortgage, Tax, Accounting, Investments)
Quote:
Orginally posted by chandresh
$2000 invested along with $400 grant on the 1st of each year compounded at 12% for 17 years comes to 131,399 (out of which about 26.3k is the interest for the last two years!)
If someone can guarantee that to me - I am ready to take that investment immediately!
Chandresh
Chandresh Bhai,
I calculted the compounding for 18 years and you would have to get around 10.804% return every year in order to achieve that maturity.
And yes, if that type of return is guaranteed then you do not have to think twice but go for it.
-----------------------------------------------------------------
Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Quote:
Orginally posted by Pramod Chopra
Chandresh Bhai,
I calculted the compounding for 18 years and you would have to get around 10.804% return every year in order to achieve that maturity.
And yes, if that type of return is guaranteed then you do not have to think twice but go for it.
I was informed that one cannot get a grant after the calender year in which the child turns 17. So would that be 17 years contribution or 18 years - no argument, just want to clarify.
Chandresh
-----------------------------------------------------------------
Chandresh
Advice is free – lessons I charge for!!
Quote:
Orginally posted by chandresh
Quote:
Orginally posted by Pramod Chopra
Chandresh Bhai,
I calculted the compounding for 18 years and you would have to get around 10.804% return every year in order to achieve that maturity.
And yes, if that type of return is guaranteed then you do not have to think twice but go for it.
I was informed that one cannot get a grant after the calender year in which the child turns 17. So would that be 17 years contribution or 18 years - no argument, just want to clarify.
Chandresh
Chandresh Bhai,
Here is the detailed explaination for CESG and the beneficiary's age etc.
CESG eligibility has nothing to do with the subscriber, and everything to do with the beneficiary. That said, the contribution itself must come 'from' the subscriber, and cannot be made 'on behalf of' the subscriber.
For example, if the contributions are coming through a Pre-Authorized Chequing (PAC) arrangement, the bank account should belong to the subscriber.
A child who is resident in Canada will generate CESG room at the rate of $400 per year, even if the child is not the beneficiary of an RESP. If RESP contributions made on behalf of a grant-eligible child, then the plan will receive CESG, to the extent of the child's room.
Since the CESG program was introduced in 1998, for children born prior to 1998, CESG room accumulates from 1998 forward. For children born in 1998 or later, CESG room accumulates from the year of birth and forward. (There are special CESG rules for children turning 16 or 17 in a year. There were also special transitional rules for children turning 16 or 17 in 1998, the year in which CESG was introduced.)
The maximum cumulative CESG that can be earned by one beneficiary from contributions made on his or her behalf is $7,200 (20% x $2,000 x 18 years). Similarly, the maximum CESG that can be received through EAPs by any one beneficiary is $7,200.
To the extent a contribution is not made, the unused room is available for future years. This allows you to make up for missed opportunities by making contributions in later years. If a beneficiary has sufficient unused CESG room, the maximum CESG payable in any one year is $800 (20% x $4,000).
The most CESG a plan can receive with respect to one year's contributions will be $800, as that is 20% of the maximum annual contribution of $4,000. However, CESG is awarded based on the date the eligible contribution is made. There are inevitable delays between the time the contribution is made, the time HRSDC is notified of the contribution, and the time HRSDC sends the institution the CESG cheque. Because of these delays (and only because of these delays), a plan could theoretically receive more than $800 in one calendar year.
Example:
Beneficiary X has $1,600 of accumulated CESG room. Subscriber Y contributes $4,000 in December and $4,000 the following January. The plan could receive $1,600 of grant in the second "year", as $800 was related to the December contribution, and $800 to the January contribution.
CESG rules for children turning 16 or 17 in a year :
--------------------------------------------------------
CESG will only be payable for resident beneficiaries who are turning 17 years of age or younger in the year that the contribution is made.
Furthermore, for beneficiaries who turn age 16 or 17 during the year, CESGs will not be paid unless:
a minimum of $2,000 of RESP contributions were made, and not withdrawn, before the calendar year in which the beneficiary turns 16 or,
a minimum of $100 of annual RESP contributions were made, and not withdrawn, in any four years before the calendar year in which the beneficiary turns age 16.
If a child is turning 16 or 17 in a year, and has never been the beneficiary of an RESP before, then that child will never get CESG. Any CESG room that such a child may have carried forward as unused from prior years will have been reduced to nil at the end of the year in which the child turned 15.
I hope this help.
-----------------------------------------------------------------
Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
I would say No considering my situation with kids.
Here are few reasons...
My kid is interested in doing either a MBBS / Engg or other professional studies.... He is an average student... if it was in india i could have paid the management fee (capitation/donation) to the colleges for pvt schools to get him educated which i think is not the case over here
And as per the rules of RESP the money is paid only to the regular fees in any part of world, assuming my kid get admission in MBBS in India unlike here where there is donation involved the fee is very minimum and donation is very high. So RESP would not cover the donation part but only the fee part... ultimately i cannot use the money.
This info is only for people looking to going back as i have seen many families in my friends circle going back who invested in RESPs
So make it very clear with your agent as to what are the gimmicks involved... as most of agents are working on commission and will tell anything and everything to get your signatures
Hi jintaku,
Let me try to address your question.
The money you contribute to RESP (say $2000 per year for 18 years=$36,000) has no strings attached to it. You can utilize this money anyway you like. No questions asked.
However, the CESG grant + interest on grant+interest on your money must meet certain conditions for you and your nominee to enjoy. I think it is fair enough.
Moreover, your nominee can study anywhere in the world and still benefit from the RESP.
-----------------------------------------------------------------
Man's Best Friend 
Advertise Contact Us Privacy Policy and Terms of Usage FAQ Canadian Desi © 2001 Marg eSolutions Site designed, developed and maintained by Marg eSolutions Inc. |