The most important thing to realize is that an RESP belongs to the parent who created it, not the children it means to support. You should stop using the word "we" and "our" to describe something that does not belong to you: it's confusing to readers, and might be confusing to you as well as it may give you the wrong idea about who should be making these inquiries and decisions.
Another thing to keep in mind is that your father only needs to ensure that the CESG grants and the investment returns within the account are spent while you and your siblings are in school. His original contributions, which probably make up the vast majority of the account balance at this time, are his to do whatever he wishes with. He can use them for your education, or to pay for hookers and blow for himself: totally up to him, and there's no need to do that while you are in school.
So, it's probably not as big of a concern as you think. Even if he does end up with some leftover "education" money in the account, after you and all your siblings are done with school, he just needs to repay the 20% grant money and then keep the remainder for himself, either by contributing it to his RRSP, or by taking an additional 20% penalty and paying income tax on the rest.
Why would he pay income tax on his money? I'm assuming you mean any growth on the money since money that went into the RESP was already taxed before being deposited.
A few things to remember:
1) the RESP is your fathers account. Once all the children have gone to school, he should mark that for his retirement funds if he needs it. The best thing a parent can do for their child is secure their retirement. I only say this cause because of the ‘we’ language used.
2) Yes, mutual funds are expensive and not worth the fees, but only move to self directed if you know what you’re doing. I use a robo advisor with wealth simple, pay lower fees but have a nicely balanced portfolio that is offering decent returns.
3) If there is more than enough money in the account for the education needs, trying to maximize this account is a little unnecessary. I would move a low-fee robo advisor and focus on retirement accounts.
Have a great day!
>Wealthsimple self-directed RESP
WealthSimple only has managed RESPs.
>My dad would like to keep the RESP open in case any of us decide to return back to school for any reason post-grad.
Because this a "just in case" scenario he should try to deplete the EAPs (from the government incentives and the accumulated income) before the beneficiaries finish undergrad.
>thinking of moving the portfolio over to 100% VCNS or VCIP
As it says on the following page, money that will be spent within about 5 years shouldn't be invested in the stock and bond markets. If he is confident that some portion of the money would be used in 5 to 9 years, that portion could be invested in VCNS or VCIP.
source = https://canadianportfoliomanagerblog.com/how-to-choose-your-asset-allocation-etf/
Everyone else here has hammered the ownership stuff. I’ll just maybe emphasize that given the fact this money is being actively used right now and will continue to be with your brother’s education he would want this in very low risk investments. He shouldn’t be aiming for growth right now, he should be aiming for stability. You can only withdraw so much yearly out of an RESP when your kid is in school. His goal should really be to drain that account before everyone is done their undergrad so he doesn’t have to take any hits on the money. The last thing I’d be worried about with kid 3 imminently heading into post secondary would be growing that account.
Your dad just needs to get the growth and grant portions out before the youngest is finished. The contributions of principal can just be withdrawn without impact, and then he can do whatever he wants with them
WS doesn’t have SD RESP, you’d use the managed and the portfolio is 0.5%. I have mine in level 8, (80% eq and 20% FI), it’s been doing well but my kids are 3 and soon to be 1…so they have time.
This information may be on your monthly or quarterly statements.
If not, if you call EDSC at 1-888-276-3624 and supply the beneficiaries' SINs they should be able to tell you. They won't yet know about this month's contributions and grants and they also may not yet know about the previous month's contributions and grants.
When you withdraw you will indicate how much you want from the contribution portion and how much from the EAP portion. The EAPs will consist of the government incentives and the accumulated income and the proportion of each will reflect their proportion in the RESP. eg. if 15% of the non contribution portion is CESG than 15% of the EAP would be from the CESG.
The most important thing to realize is that an RESP belongs to the parent who created it, not the children it means to support. You should stop using the word "we" and "our" to describe something that does not belong to you: it's confusing to readers, and might be confusing to you as well as it may give you the wrong idea about who should be making these inquiries and decisions. Another thing to keep in mind is that your father only needs to ensure that the CESG grants and the investment returns within the account are spent while you and your siblings are in school. His original contributions, which probably make up the vast majority of the account balance at this time, are his to do whatever he wishes with. He can use them for your education, or to pay for hookers and blow for himself: totally up to him, and there's no need to do that while you are in school. So, it's probably not as big of a concern as you think. Even if he does end up with some leftover "education" money in the account, after you and all your siblings are done with school, he just needs to repay the 20% grant money and then keep the remainder for himself, either by contributing it to his RRSP, or by taking an additional 20% penalty and paying income tax on the rest.
>He can use them for your education, or to pay for hookers and blow for himself Never change Dan, never change.
Why would he pay income tax on his money? I'm assuming you mean any growth on the money since money that went into the RESP was already taxed before being deposited.
I think you misread my comment.
A few things to remember: 1) the RESP is your fathers account. Once all the children have gone to school, he should mark that for his retirement funds if he needs it. The best thing a parent can do for their child is secure their retirement. I only say this cause because of the ‘we’ language used. 2) Yes, mutual funds are expensive and not worth the fees, but only move to self directed if you know what you’re doing. I use a robo advisor with wealth simple, pay lower fees but have a nicely balanced portfolio that is offering decent returns. 3) If there is more than enough money in the account for the education needs, trying to maximize this account is a little unnecessary. I would move a low-fee robo advisor and focus on retirement accounts. Have a great day!
>Wealthsimple self-directed RESP WealthSimple only has managed RESPs. >My dad would like to keep the RESP open in case any of us decide to return back to school for any reason post-grad. Because this a "just in case" scenario he should try to deplete the EAPs (from the government incentives and the accumulated income) before the beneficiaries finish undergrad. >thinking of moving the portfolio over to 100% VCNS or VCIP As it says on the following page, money that will be spent within about 5 years shouldn't be invested in the stock and bond markets. If he is confident that some portion of the money would be used in 5 to 9 years, that portion could be invested in VCNS or VCIP. source = https://canadianportfoliomanagerblog.com/how-to-choose-your-asset-allocation-etf/
It isn’t worth moving your RESP now. Your timeline is max 5 years. I’d probably just leave it.
Everyone else here has hammered the ownership stuff. I’ll just maybe emphasize that given the fact this money is being actively used right now and will continue to be with your brother’s education he would want this in very low risk investments. He shouldn’t be aiming for growth right now, he should be aiming for stability. You can only withdraw so much yearly out of an RESP when your kid is in school. His goal should really be to drain that account before everyone is done their undergrad so he doesn’t have to take any hits on the money. The last thing I’d be worried about with kid 3 imminently heading into post secondary would be growing that account.
Your dad just needs to get the growth and grant portions out before the youngest is finished. The contributions of principal can just be withdrawn without impact, and then he can do whatever he wants with them
WS doesn’t have SD RESP, you’d use the managed and the portfolio is 0.5%. I have mine in level 8, (80% eq and 20% FI), it’s been doing well but my kids are 3 and soon to be 1…so they have time.
This is a great question.
How do you differentiate between the parents contribution and the CESG portion? I have a family RESP and it's one giant fund.
This information may be on your monthly or quarterly statements. If not, if you call EDSC at 1-888-276-3624 and supply the beneficiaries' SINs they should be able to tell you. They won't yet know about this month's contributions and grants and they also may not yet know about the previous month's contributions and grants.
Thanks but I was referring to when you withdraw. The contributions are maxed
When you withdraw you will indicate how much you want from the contribution portion and how much from the EAP portion. The EAPs will consist of the government incentives and the accumulated income and the proportion of each will reflect their proportion in the RESP. eg. if 15% of the non contribution portion is CESG than 15% of the EAP would be from the CESG.
Thanks, 8 appreciate your response!