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Originally posted by myjughead

That is why it is recommended that we should not contribute more than $2500.00 in a year so that we can get benefit of max. grants.Thanks.

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Fido.

Hi Fido,

You are right. That is called RESP catch-up, which means if you didn't started RESP for kids late, then one should contribute $5000.00 to get CESG for one previous year but you can only catch up one year at a time.

Further, I humbly differ with you opinion that it is "always better" to invest in RESP through banks. Many reason for that such as;

1. Some banks does not even apply for all the applicable grants, for example, TD bank only applies for basic CESG and does not apply for Additional CESG even if someone is qualified based upon income criteria.

2. There are some financial institutions like Industrial Alliance (4th largest insurer in Canada), that gives additional education bonus up to 15% on contributions made under their Diploma RESP program, which is not given by any other financial institution in Canada. Further, depending upon what age the RESP is set-up, it can provide 100% principal guarantee, which again cannot be provided by any bank RESP provider.

3. Questrade, Scotia I-trade, TD waterhouse etc etc are great platforms but only for DIY investors, who have relatively better knowledge of investing and how to use various financial instruments based upon their risk appetite.

On the same note, I absolutely disdain GROUP RESP providers like Heritage, CEF etc etc due to their exorbitant sales charges, admin fees and strict withdrawal restrictions and choice of educational institutions and educational programs kid can enroll in.

Thanks,

Thanks everyone. I found the contact number where you get all detail information about how much you contributed and how much grant you received. This year how much you can contribute to receive the 20% grant etc. You need to provide SIN number of child and they have all information related to RESP.

Contact #: 1-888-276-3624

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Success is Never Ending and Failure is Never Final.

Good to know about advance withdrawal of additional $14K contribution.

I don't see anything wrong to contribute $14 at early stage if you commit to not withdraw before child goes to university. It will grow tax free.

Do you think most parent aware of it and contributes $14K to grow tax free? (May be most of us are not exceeding the TFSA limit. So, this may not make sense for them)

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Originally posted by myjughead

Hi there,

Once $36k are contributed in RESP it will not attract any grants. So yes, you can deposit balance of maximum allowed limit $14K to grow tax free.

Further, when you withdraw, as per CRA rules, your contributions will come back to you tax free but the grants equivalent to $14K contribution will be returned to CRA, because CRA does not recognise that this $14K was additional contribution above $36K. For them, if the money is withdrawn from RESP before kid goes to university, equivalent grant provided to date must also be returned.

Thanks

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Success is Never Ending and Failure is Never Final.

You are right meitsme, not many people have $14K to contribute in one shot for RESP and given the other investing and saving vehicles (RRSP and TFSA),not much is left over in most cases.

Regards,

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Originally posted by myjughead
Further, when you withdraw, as per CRA rules, your contributions will come back to you tax free but the grants equivalent to $14K contribution will be returned to CRA, because CRA does not recognise that this $14K was additional contribution above $36K. For them, if the money is withdrawn from RESP before kid goes to university, equivalent grant provided to date must also be returned.
Thanks

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MK