Best major-bank RESP in Canada (for relatives to contribute to)

[MBot]

I've been looking into RESPs for our future mini mustache (coming in December), and I have seen there is a way to do it with TD's ETFs.

However, I'm guessing this makes it a lot harder if I want relatives to contribute to it, and at least two of the grandparents will give small amounts ($30 here, $50 here) at Christmas and birthdays.

What have other Canadians done in this situation, and what kind of portfolio/MER have you been able to find?

[K-ice]

I am not sure if it really matters what bank. But I'd be open to hear good or bad stories.

TD e-series is probably a good choice. Maybe hold a bit more cash or GICs as it gets closer to graduation.

I just opened a basic account for my son and let the gifts and $100 government cheque build up. Near the end of the year I top it up to $2500, throw it into an RESP & purchase the investments I want. The gov then gives me a nice $500 bonus. Instant 20% return on investment!!!

I max out his RESP befor my RRSP or TFSA. I don't think MMM would agree, but that target is easier to hit and who can say no to a 20% ROI?

Ideally, I should maybe be investing at the start of the year or quarterly (dollar cost averaging) but with $5-10 transaction fees, I just do it once.

Some relatives may be a bit anal and want to contribute directly. But a $10 fee to invest  a $30 gift is face palm. If they don't trust you to put it in the RESP you have bigger helicopter grandparent problems. Sorry ;).

Congrats on the upcoming arrival! And enjoy watching your LO & the RESP grow!

[TrMama]

I opened children's savings accounts for each of my children, specifically so I can deposit checks made out to them from relatives. Then I transfer the money from the savings account to the RESP. Technically the RESP is in the parent's name, not the child's. The child is just the "beneficiary" of the RESP. It would save 5 minutes if our relatives would write the check out to me and then I could just deposit it right into the RESP

None of our relatives have wanted to contribute directly, so I'm not sure how to do that.

[MBot]

Thanks for the feedback! I like the idea of doing it with TD e-series.

Due to other family members use of funds and the large geographical distance between us.... I believe it would be simpler if they could go "oh, we can just walk into X bank and contribute directly to MiniBot's RESP" as an option instead of writing cheques or shipping gifts.

But I am also equally sure many cheques will come right to them/us for us to manage, so perhaps I'm overthinking the whole business.

[Goldielocks]

I use TD for resp's too. Grandparents email the money from their acct, I move it to the kids savings accts right away and then put it into the resp a couple of times per year.  We don't get the baby bonus cheques, but if you do, they are income tax free if put into resp directly. So get that set up asap.

Note that you can keep the resp money as cash in the TD (or most) RESP accts until you want to buy securities or bonds, and the 20% CESG is received monthly after a deposit is made to the RESP acct.   So you can hold the money there and buy or rebalance yearly for a single fee.

Some relatives may not want you to have control of the money or the ability to withdraw it. ( note some penalties exist if you do withdraw, but the biggest is a freeze on more CESG money for a couple of years)

So, The only way grandma can keep control of her contribution is to set up a second RESP for your child, with her name as the contributor. . As long as the lifetime total per child in all RESP's is not exceeded, all is good. I think that is $50k.

The yearly limit you may hear about is for the CESG funds, not your contributions. $1000 per year is the max CESG.

If your income is modest, don't forget to apply for the additional grants, too.

[TrMama]

We don't get the baby bonus cheques, but if you do, they are income tax free if put into resp directly. So get that set up asap.

Can you elaborate on this? Do you mean if I deposit my UCCB money into the RESP it won't be counted as my income? I've never heard of this before.

[Goldielocks]

Sorry I had that wrong.

Looking it up this is the tax advantage:  you are not taxed on the income it earns, but your child is.   So this is additional money you can save and invest with or without Resp.

If your client receives a Canada Child Tax Benefit (CCTB) or the Universal Child Care Benefit (UCCB) and does not need this money to feed or clothe the child, he or she can save the money for the child's education costs. Your client deposits the cheques into a separate bank account in trust for the child. Funds in this account are considered to belong to the child and any income earned will not be attributed to your client. As long as the funds can be traced, your client can invest this money without income attribution.

Note that cctb is already not taxed but uccb is.
The CCTB is aimed at low and middle-income families. The amount is based on the ages and number of children, family income and care expenses. Benefits are paid monthly and are non-taxable.


This, and tfsa contributors are among the few areas where you can give money to family to invest and it, the income,  is taxed in their name.