RESP recommendations pls | General comparisons | Discussion forum

We are happy with Canadian Scholarship Foundation. It is neither a bank nor financial institution, it is purely an RESP provider. RESPs are a great savings vehicle, especially due to the government grants. They differ in how aggressively they invest, vs giving you control in choice of what to invest in, in how the money is returned to you and the child once the plan matures, in what happens if you stop contributing, and whether the money can be rolled over to another person if the child does not go on to study after high-school. Do lots of research.

"The Canadian Scholarship Foundation is one of Canada’s largest and oldest group Registered Education Savings Plan (RESP) providers in Canada with over 56 years of experience providing education savings solutions to families across Canada."

I agree with Norman1 re the group RESPs, fees! One idea is to open a self-directed RESP account with one of the large banks' discount brokers if you want to pick from a large selection of investments and control the investments choice yourself.

Atlas, I don't understand your 3rd paragraph. My understanding is it's the government that puts in the CESG, as well as the additional CESG for lower-income folks, directly into the RESP account. What do you mean when you say TDDI doesn't offer it?

Bill said
Atlas, I don't understand your 3rd paragraph. My understanding is it's the government that puts in the CESG, as well as the additional CESG for lower-income folks, directly into the RESP account. What do you mean when you say TDDI doesn't offer it?  

Bill, thanks for point this out. I should clarify that TDDI does offer Additional CESG for contributors with adjusted family net income <= $83,088, as per here: https://www.td.com/ca/products-services/investing/td-direct-investing/accounts/resp/index.jsp#content3

However, some RESP Promoters do not offer A-CESG or CLB (although it's only a few that do not). See: https://www.canada.ca/en/employment-social-development/services/student-financial-aid/education-savings/resp/resp-promoters-list.html

This could be cause for confusion though. TD Securities (TDDI) states ACESG is offered, however the ESDC states TD Securities does not. Best to check with the promoter, just in case .

When all my kids were young Canadian Scholarship Foundation was pretty much the only choice. Now that there are better options I agree with those who say stay away from these group plans.

Also, be careful of the RESP rules re the grant, they can be a little different. For example, the most they'll ever pay out in any year (re the 20% grant) is $1K. So don't put in more than $5K in any year, that way you'll get $500 for the current year and $500 for a previous year when you didn't contribute - any more than $5K in a year will never qualify for a grant. As the max grant is $7.2K, you hit that at $36K of contributions, so in essence you could wait until the child is age 9 or so, then contribute the $5K a year until you hit the $36K and you'll get the max grant.

I know most people want to get going asap, sheltered income and all that, but just something to keep in mind: We all picture our babies going to university, etc but it doesn't always happen. One of my sons, from families on both sides where everybody goes on to "higher" education, decided in grade 12 or so he had no more interest in education (only thing is he didn't share that information), and then, despite a sterling academic record until about grade 12, spent 3 years having fun with the ladies and playing sports in university until they kicked him out, happily blowing much carefully laid aside money. He ended up feeling bad about that part, but we laugh about it now, he says I always told him to do what made him happy, even if it meant being a cowboy or a pirate (my wife was not impressed when she later heard that!), and all is well with everybody, he loves his work - and now he comes to me asking about RESPs for his 0 and 2 year-old, he says he doesn't care what area of brain surgery they pick for a career! But the point is his future ended up unfolding in a way no-one in the family ever would have predicted in a million years. So flexibility of any RESP plan would be a big priority for me if I was doing it again, though I believe that's not such an issue today as in the days when options were much less.

I think the RESP accounts themselves are CRA's responsibility. The RESP accounts can accept grants. Those grants are the responsibility of other government departments.

Employment and Social Development Canada (ESDC) handles applications from RESP providers for

1. the Basic CESG, Additional CESG, and CLB grants for the federal government,
2. the SAGES grant for the Saskatchewan government, and
3. the BCTESG for the BC government.

Revenu Québec handles applications from RESP providers for the QESI grant for the Québec government.

Grant rules are all over the place. Some are a percentage of parent's contributions. Some are not.

For example, BCTESG grant is $1,200 one-time. Just open an RESP and apply between child's 6th and 9th birthdays. No parent contribution needed.

Bill said
… But as providers' contracts differ, again it's very important to make sure when you set up an account that the contract will allow you the flexibility to do what you ultimately intend to do - as contracts differ, don't assume.  

I agree. The RESP contracts do differ and a particular RESP may not allow all the flexibility allowed.

An example of this are the EAP payments to the student that withdraw the grants and earnings from an RESP. The Income Tax Act allows up to $5,000 of the grants and earnings to be withdrawn for the first 13 weeks of studies and no limit after the 13 weeks.

The CST group RESP further restricts this to require the grants and earnings to be withdrawn over four yearly EAP payments. This is from page 30 of the Group Savings Plan 2001 prospectus:

As the EAPs are paid out in four installments, your Beneficiary will need to qualify for the installments over a four year period by enrolling in Eligible Studies. This does not necessarily mean a four year program, but could include any combination of programs or years that total four years. For example, your student could pursue four one-year programs or two two-year programs and collect the maximum number of EAPs. Beneficiaries who enroll in Eligible Studies of less than four years, or who do not pursue four years of Eligible Studies, will not qualify for the maximum number of EAPs and will receive a lower total amount of EAPs over the duration of their Eligible Studies than Beneficiaries who complete four years of study.

As well, page 24 discloses that the student being able to receive all four EAP's is a condition of getting back 50% of the sales charges:

The Foundation will refund 50% of the sales charges you paid for your Units if you make all required Contributions, your plan reaches maturity and your Beneficiary receives all four EAPs.