RESP Part II

[frugalcanuck]

I started my daughters RESP with the Royal Bank.  A few weeks after I did that I opened up Questrade and started an RESP account there as well.  I would like to get the money (I didn't buy anything) from the royal bank account to the Questrade account.  Royal Bank says they will do it for a fee of $150 probably plus taxes.  I do not want my daughter to loose any of that money.  So if I close down the account (which I was told would be free) I can get back the money we put in it but the government money (Canadian Education Savings Grant) will be taken away.  Does anyone know if the CESG will get paid back when we put the money back into the RESP with Questrade?  I would like to have her RESP all in one place and it makes more sense to have it in Questrade with the cheap etf purchases.

I cannot find anything about a situation like this on the government web site.  Money smarts blog says its a one time 20% return on your investment but I don't know if that is literal or not.

Thanks again

[Goldielocks]

No,   If you actually withdraw your contributions, they may even freeze your CESG grants for the next two years (not give you matching funds for 2 years as a penalty for withdrawing contributions from the "RESP Registered Bubble"), and charge you tax an penalty on the accumulated income..   Do not close / withdraw as cash.  Keep the royal bank one and stop contributing to it or pay the transfer costs.

Is it $150 even if you  sell and they only transfer it as cash?   There are often different fees for - closing account -- transfers in kind -- transfers in cash.   Maybe they would charge you less if you transfer most of the value, in cash, but keep a minimum there to keep it open for now.   $150 looks like a standard fee to cancel a RRSP registered account.

Also, watch out if you received any provincial RESP monies or Canada Learning Bonds when transferring.  e.g., BC now has a small amount for kids born after 2007;  Not all banks will manage / handle these extra amounts so if you try to transfer to a bank that does not deal with them, then you lose them.

TD was one of the ones that did not do the paperwork for Alberta Baby Bonus or the Canada Learning Bond (a grant for low income education money) in RESP's.... so it is not just small institutions that don't do common paperwork things.

[joonifloofeefloo]

Sorry for lateness...

+1 to everything G said, and also: Sometimes the receiving institution will pay transfer fees. Both TD Direct Investing and RBC direct investing did this for me when I moved stuff in from each other and additional places.

Even if not, that $150 will likely pay for itself over the years of low fees (if you maximize the RESP).

Finally, you can keep them at RBC direct investing and still put them in the Vanguard ETFs, etc.

[The Fake Cheap]

No,   If you actually withdraw your contributions, they may even freeze your CESG grants for the next two years (not give you matching funds for 2 years as a penalty for withdrawing contributions from the "RESP Registered Bubble"), and charge you tax an penalty on the accumulated income..   Do not close / withdraw as cash.  Keep the royal bank one and stop contributing to it or pay the transfer costs.

Is it $150 even if you  sell and they only transfer it as cash?   There are often different fees for - closing account -- transfers in kind -- transfers in cash.   Maybe they would charge you less if you transfer most of the value, in cash, but keep a minimum there to keep it open for now.   $150 looks like a standard fee to cancel a RRSP registered account.

Also, watch out if you received any provincial RESP monies or Canada Learning Bonds when transferring.  e.g., BC now has a small amount for kids born after 2007;  Not all banks will manage / handle these extra amounts so if you try to transfer to a bank that does not deal with them, then you lose them.

TD was one of the ones that did not do the paperwork for Alberta Baby Bonus or the Canada Learning Bond (a grant for low income education money) in RESP's.... so it is not just small institutions that don't do common paperwork things.

Don't want to stray to far off topic but I ran into this situation when I was working at a bank and I opened an RESP for someone whose kids were in Alberta, who qualified for some sort of special Alberta grant money....that my bank didn't administer.  I had no idea about it since I was in another province (NB).  Dude was pissed, and I can't say I blame him, but at least he found out after only a few months and not a large amount invested.