[HaroldCrump]

That's interesting. I didn't know that parents can apply and have the grant money issued and deposited into the RESP account themselves. Anybody know how this is done (i.e. which forms should be filled out and the logistics of how to get the grant money deposited into the RESP account)

Hi CC,
I did this earlier this summer.
My RESP A/C is with i*Trade and it was relatively easy to do so using their forms.
The forms are available here:
https://www.scotiaitrade.com/pages/home/formsb.shtml
Once it is sent to the institution, they fwd to CRA and everything is set up correctly.
You need to ensure that the primary holder of the RESP A/C is the same spouse that is receiving the CCTB payments.
You may open a joint RESP A/C but the receipient for the CCTB must be the primary account-holder.
This is true for single beneficiary as well as family plans.

 

[HaroldCrump]

I'm doing some research into how people invest for their children's post-secondary education. It seems TD e-Series index funds within an RESP are a popular choice. Anyone doing it differently? What about other options outside an RESP like universal life insurance policy, group scholarship plans, pay off debt now to free up cash flow during university years, in-trust accounts, CTB/UCCB invested in account, monthly income funds, tax-advantaged mutal funds, TFSA, age 40 trust etc. Is anyone using them instead or as supplements?

Hi Larry,
We opened RESP accounts for our kids this summer.
This year's contribution and grant is still sitting as cash, but I plan to deploy early next year.

My plan is as follows:
- Build a bond ladder of good-quality bonds with the contribution portion of the account. Keep bond duration short (i.e. 5 years or less).
- Every year keep purchasing bonds as above. Time required for bond selection will be a few days of research and screening every year.
- Invest the CESG grant portion (20% up to the limit) into an equity index (XIU most likely).
Time to invest and monitor this component is fairly minimal.
- As education time gets closer, downsize the equity index and move into cash or very safe Govt. bonds.

This is only a plan for now.
I'll have to wait and see how well this works out and whether I'm able to keep up the contributions year after year.

 

[HaroldCrump]

Does the RESP provider offer the extra grants (if applicable). If yes then make sure they fill out the forms with that in mind and make sure you are getting the extra grants.

I take it that by "extra grants" you mean CLB and other top-ups for low income families?
If so, those are automatic based on your previous year's tax returns.
Once CRA has received your RESP account information, from that point on, everything should be automatic.
Just like the CCTB - they adjust that upwards or downwards every year based on your tax return.

 

[HaroldCrump]

A slightly different train of thought, but if I wanted to contribute to my nephews RESP, can I contribute directly without having to write a cheque to his parents to deposit?

You will need to formally open an RESP account with your nephew as a beneficiary.
You need this form:
http://www.docs.scotiaitrade.com/pdf/etca_CESG_other_eng.pdf

 

[HaroldCrump]

I'm confused now. This HRDC page mentions which promoters are set up to receive all the grants one is eligible for:
Curiously, iTrade or E*Trade doesn't seem to be listed in that page.

It is - as Penson Financial Services, which is the broker for all RESP accounts at E*Trade.
I recall when I filled out the E*Trade application form for RESP, the promoter listed was Penson Financial.
Therefore, any RESP accounts held at i*Trade should be eligible for maximum possible govt. grants.

However, now that E*Trade has been completely taken over by Scotia Capital (which is now the settlement agent for all i*Trade transactions), it raises an interesting question whether the extra grants can continue since Scotia Capital doesn't appear to be on the full grants list.

I will call and ask next week.

 

[HaroldCrump]

However, now that E*Trade has been completely taken over by Scotia Capital (which is now the settlement agent for all i*Trade transactions), it raises an interesting question whether the extra grants can continue since Scotia Capital doesn't appear to be on the full grants list.

I will call and ask next week.

Finally managed to get thru to Scotia iTrade customer service.
According to them, additional CESG grants and other types of grants like CLB are no longer possible in RESP accounts with iTrade.
If someone is eligible for additional grants and wants to continue receiving them, the only option is to transfer the RESP account to another institution.
Only the basic CESG grants of 20% every year is possible with iTrade.

 

[HaroldCrump]

Should really switch to TD efunds for better MER but have not had the time to setup a TD bank account first, which I was told is needed to get access to the TD online efunds.

TD bank account is not needed for eSeries account.
You will however get a TD Bank Card, which will be your online login account number.
You don't need to open a retail banking account just to get eSeries.

 

[HaroldCrump]

So you don't need to get an account to get a card?

Nope, you don't need an account.
But if you ever were to open one, it would be attached to the same card.

This is good to know and I will go back to my local branch to get one (maybe I should just call TD instead?). When I went about a year ago they told me I need to open an account and could then apply to get access tothe eSeries funds. I didn't want yet another bank account, so I left.

You can't go to a branch and open eSeries account - that's the whole point of web accounts.
You "open" the account online and then mail them proof of identity, like driver's license, address proof, etc.
You will receive all account documents by post including your access card.
At no point will any branch be involved in the process.

Frankly, though, they seemed to know little about the eSeries at all. The account rep. I was given had to look on their own public website to find out what I was talking about when I said I wanted to get access to eSeries and how do I do it! So it is not surprising that me needing an account was also incorrect.

It's not surprising that they won't know about eSeries.
Even if they did, they won't be very helpful.
The purpose is to have a "self-service" account, which means less work for them and thus lower fees for you.

 

[HaroldCrump]

I am not able to get specific details about the additional CESG grant that is available for RESP account based on family income.
How much is the additional CESG per year?
Is it still part of the $7,200 max grant or is this over and above that?
The canlearn site is not very clear about the exact amount of the additional CESG grant.

 

[HaroldCrump]

Thanks, FP for the details.

The extra grants are included when calculating the $7200 lifetime limit.

So those with income less than $77,664 are not really getting extra grants, are they?
They are simply getting the $7,200 max grant sooner than others.
In other words, by getting the extra CESG grants, they'll reach the $7,200 limit faster than others, but not get anything more - correct?