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RESP...still don't know what it means for me

acoutu — Mon, 29 Jan 2007 19:47:28 -0800

College savings: Does the government care how you spend a college savings plan in Canada? More than a year ago, I asked about registered educational savings plans. Now I'm wondering how the (Canadian) government regulates how you spend them.

I understand when my child(ren) can withdraw the funds and that they have to be registered in a post-secondary program. But, aside from that, how does the government check to see what you spent the money on?

I see that there's a $42,000 contribution limit over your child's lifetime. Let's say this grows to $78k. Tuition in, say, 2023, is $12k per year and my child needs a total of $50k to cover four years while living at home. My child also works at some internships and part-time jobs that cover, say, $24k of expenses. After they kick that in, there's around $50k left in the RESP. Heck, let's say there's even $25k left.

Do you have to spend this money on room and board? What's to stop someone from using this to save for a downpayment on a condo that they help their child upon graduation? Or for a car to help them get to school? Or for some other purpose? (I recognize the money is taxed in the child's hands upon withdrawal, but let's assume the child hangs on to the withdrawn money.)

And, if your child only does a one-semester program, can they pull all the money out at once? The government's RESP page is pretty vague.

Planning now for better opportunities for my daughter

Kickstart70 — Thu, 20 Apr 2006 10:59:39 -0800

When it came time for me to think about where my life was going, my parents let me know a couple things: - they made enough money that the Canadian government wouldn't let them off the hook for helping to pay for my education, so student loans were reduced. - they weren't going to/weren't able to help me with paying for my education anyway. Consequently I never went to college or university. I've managed all right without any training or degrees, though not as well as I likely would have. I suspect I will never have time/opportunity/money to fix this. My daughter will be born in late June. What can I do now (in Canada) to make sure she has better opportunities than I did?

RESP...tell me what it means to me...

acoutu — Mon, 14 Nov 2005 15:34:23 -0800

CanadaFinancialFilter: What's the best way to invest in an RESP? My husband and I recently opened a no-fee bank RESP for our son. We plan to use the bank RESP until we have enough money to warrant opening a self-directed RESP. However, we know some people who have gone with "scholarship trust" plans. It sounds like these programs involve a bit of a risk, in that your child may not pursue four years of post-secondary education. My husband and I both have masters degrees, but we recognize that our children may not be interested or even suited to university. We want to make sure that the maximum amount of our contributions/interest/grants will be available for RRSP transfer, cash out or what-have-you, in the event that our children do not pursue post-secondary programs. We don't want our children to feel guilty or pressured about university, even though we think there is a strong likelihood that they will pursue some form of post-secondary education.

Canadian parents...what do you think the best way to invest in an RESP is?