[Four Pillars]

Self-directed RESP accounts are definitely eligible the "extra" resp grants. Not all companies provide them however.

As CC pointed out the TD efunds resp does not allow for the extra grants. I believe the normal TD mutual fund account does allow these extra grants (but you can't buy cheap efunds in that account) and there is a monthly fee? RBC direct is another one that doesn't offer these grants. Questrade does allow the extra grants in their RESPs.

I suspect that if you are eligible for the extra grants then you might be better off with more expensive mutual funds (even at IG) rather than TD efunds (which would mean foregoing the extra grants).

Best thing to do would be shop around - IG has some of the highest MERs around. There has to be something cheaper that pays the extra grants.

 

[Four Pillars]

Thank you Harold. I sometimes receive questions on how to get extra grants if the account is not set up to receive it automatically. Now, I know where to point them

I think this was more or less answered by Harold Crump but I want to emphasize that you don't apply directly to the government for any of these grants. You always have to go through your RESP provider and they will forward the forms to the HRSDC for approval.

I believe form SD 0071 is the one normally used for the basic grant plus additional grants. You can find the government forms here:

http://www.hrsdc.gc.ca/eng/learning...ications_resources/promoter/forms/index.shtml

If someone is looking to set up an RESP the main points to know are:

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.

 

[Four Pillars]

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.

No, they aren't automatic.

When the resp account is first set up the resp promoter has to send the form to the HRSDC. I linked earlier to form SDE 0071 which is the main form used.

If you look at the top of the first page there are check boxes for basic grant, additional grant and CLB. If you only apply for the basic cesg grant then you would just check the first box and only fill out part A (subscriber info). To apply for the additional grants you have to check the other boxes and fill out the other parts of the form (custodial parent and primary caregiver info).

In your case (I'm guessing) where you are the subscriber, guardian and primary caregiver and probably a lot of cases, the resp provider probably asked you to fill out the entire form and check all the boxes. Once this happens then that means you have applied for all the available grants and the process will be automatic from that point on (but you should still check the grants).

A lot of people (like myself) didn't fill in the extra sections because they know they won't get the extra grants. In retrospect this is kind of dumb because if I become unemployed or whatever then I have to submit the completed form again.

Another scenario is where the subscriber and primary caregiver are not the same person. My parents for example have an resp account for my niece. To apply for the extra grants would have meant getting the info from my sister which we didn't bother doing since at the time they didn't qualify for extra grants. Now, she probably does qualify and I have to get the forms filled out properly. Again, it would have been better to just apply for all the grants when opening up the account.

 

[Four Pillars]

I'm confused now. This HRDC page mentions which promoters are set up to receive all the grants one is eligible for:

http://www.hrsdc.gc.ca/eng/learning/education_savings/publicsection/new_promoter_list.shtml

Some of the promoters (such as the asset management arms of the big banks) are not set up to receive *all* the grants. Doesn't it mean that supplying the promoter with another set of forms won't help? Curiously, iTrade or E*Trade doesn't seem to be listed in that page.

That's correct - if provider doesn't have the ability to handle extra grants then you won't get them. The extra forms will be a waste of time.

 

[Four Pillars]

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?

FT, I've been able to contribute to my niece's resp in the past but I know that sometimes financial institutions won't accept checks that have a different name on the account.

You should call the financial institution and see if they will accept a check from you. Unfortunately they might not because of the newer money laundering/anti-terrorist rules.

As Harold said, you can set up an resp yourself or give the money to your siblings (and hope for the best).

 

[Four Pillars]

....

I very carefully researched this issue and I did not find any company that offered self directed RESP that also was allowed to apply for the Canada Learning Bond and Canada Learning Bond Fee. They also would not offer the Additional Education Savings Grant.

TD did offer this but only with a GIC RESP. I can tell you I was exhausted by this time.... Investor's Group did apply for all the grants, they did not charge any fees whatsoever except the MER. The CLB alone is worth $500 plus $100 per year.

....

This is the problem with the RESP program - it's too complicated, too expensive to administer and that's why only the high-cost companies can afford to offer the extra grants (which are a big money loser).

I think Berubeland is right - all the big mutual fund companies offer the extra grants so if you qualify then they are probably the best bet.

Alternatively, the extra grants are only applicable to the first $500 of contributions each year so someone who was really keen could set up one account with a high-cost provider (ie IG group) and only contribute $500 per year which would allow them to max out the extra contributions.

Any additional contributions (up to $2k) could be made in a low-cost account like the TD e-fund which would only get the basic CESG.

I actually wrote a post a while back about how dumb the whole resp system is...way too much wasted money.

http://www.four-pillars.ca/2007/12/07/resp-my-suggestion-for-a-better-resp-program/

 

[Four Pillars]

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.

Harold, the basic RESP grant is 20% of contributions up to $500 per year.

All the extra grants are based on net family income - not sure if these numbers are completely up to date.

If net family income is greater than $77,664 then they only qualify for basic 20% grant.

If net family income is between $38,832 and $77,664 then can get 10% extra grant on the first $500 of resp contribution (ie a max of $50 grant per year).

If net family income is less than $38,832 they can get 20% extra grant on the first $500 of resp contribution.

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

Canada learning bond is available if the primary caregiver is receiving the national child benefit supplement.

 

[Four Pillars]

Thanks, FP for the details.

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?

That's correct - low income people can only get the same amount of grants as high income people (as Berubeland said).

It's still a bonus, albeit fairly limited. If I make a contribution of $1000 then I get a $200 grant. If a very low income person makes the same $1000 contribution then they can get a $300 grant which is more.

They are getting extra grants but in the situation where they reach the maximum grants then no, at that point they aren't getting extra grants. But they need to contribute a bit less to reach the $7200 max.