Author Topic: Gifting RESP money to baby?  (Read 470 times)

PoutineLover

  • Pencil Stache
  • ****
  • Posts: 993
Gifting RESP money to baby?
« on: November 22, 2018, 09:00:36 AM »
So my friend is having a baby soon, and I thought that as a Mustachian, it would be nice to gift her money to put in the baby's RESP account (I think it's like a 529 in the states). The government matches 20% of the first $2500 contributed per year, and I figured it's also a nice annual birthday present that doesn't create a bunch of waste. For parents out there, would this be a welcome gift, or would you just prefer no strings attached cash, or something off the registry? I think if I give the money, I'd also include a nice book, I figure the baby is probably already getting tons of toys and clothes and all the big stuff is already chosen. Thanks for any advice!

Mountainbug

  • 5 O'Clock Shadow
  • *
  • Posts: 60
Re: Gifting RESP money to baby?
« Reply #1 on: November 22, 2018, 10:13:36 AM »
I am in the states so I am not familiar with RESP accounts, but I think this is a lovely idea and it would be very welcome at my  house! But of course it depends on your friend. Very thoughtful of you!

PoutineLover

  • Pencil Stache
  • ****
  • Posts: 993
Re: Gifting RESP money to baby?
« Reply #2 on: November 22, 2018, 10:28:12 AM »
I hope she'd like it too, I know if it was me I would! My parents told me that they saved all the child tax credits and monetary gifts in my RESP as I was growing up, so I had a decent amount for university, and it didn't really come out of their everyday budget since it was the "extras". I know she's not quite as much of a saver as I am, but maybe the kick start of getting an initial contribution will encourage her to save more for the kid.

TrMama

  • Magnum Stache
  • ******
  • Posts: 2602
Re: Gifting RESP money to baby?
« Reply #3 on: November 22, 2018, 11:03:09 AM »
Fantastic gift! I've frequently requested RESP contributions in lieu of crappy plastic gifts.

Just FYI, the parents need to get a SIN number for the child before they can open an RESP account.  So they'll have that hoop to jump through before your gift can be put to use.

PoutineLover

  • Pencil Stache
  • ****
  • Posts: 993
Re: Gifting RESP money to baby?
« Reply #4 on: November 22, 2018, 01:38:22 PM »
@TrMama I'm glad it's something you've appreciated. I printed off some info for her on how to set it up, and I made a little graph showing how much the contributions could be worth by age 18, including all the free money from the government.  Maybe her baby will be a little mustachian!

TrMama

  • Magnum Stache
  • ******
  • Posts: 2602
Re: Gifting RESP money to baby?
« Reply #5 on: November 22, 2018, 02:24:05 PM »
Depending on what year the child is born in, there was also a free grant that was given to all children with accounts. Even if the current balance was $0. Not sure if that's still going on or not though. I think it was for $1200, so not chump change.

Nangirl17

  • Stubble
  • **
  • Posts: 143
Re: Gifting RESP money to baby?
« Reply #6 on: November 26, 2018, 12:51:27 PM »
An RESP is a great gift! I'm willing to bet that they will appreciate it most if they already have one going.... I gifted RESP contributions to my nephews when they were young, but never neglected to give them something tangible (that they could open!). I had to ask my brother for the contact information on how to contribute though, because they already had one set up.

When I had a baby, I appreciated receiving clothing that was much larger than baby size too - they grow so fast in the first year! I really appreciated that some people were thoughtful enough to buy clothing that was 2T, 3T etc!

PoutineLover

  • Pencil Stache
  • ****
  • Posts: 993
Re: Gifting RESP money to baby?
« Reply #7 on: November 26, 2018, 01:34:49 PM »
She seemed to like the gift, and I made sure to include information on the grants that are available as well, although she can't open the account until she gives birth so it's a bit premature but oh well. For birthdays I'll probably give something little to open too, but for now I saw the giant pile of presents they've gotten already and I think they have everything they need already. Thanks for the input everyone, I think this is going to be a useful idea now that many of my friends are becoming parents.

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1603
Re: Gifting RESP money to baby?
« Reply #8 on: November 27, 2018, 01:50:16 PM »
For lower income earners there's an added bonus to your gift. If you are kind enough to contibute $100/year for 4 years, the recipient (baby) can then self contribute if they want when they are older; after school job at age 16 perhaps. Its a plan for teenagers who save for their own schooling; if parents aren't going to save as well (no judgement here, not every parent can).

If your friend is low income the first $500 also qualifies for an additional 10% bonus.

"For 16- and 17-year-olds (calendar year in which they turn 17), one of the following conditions must have been met by the end of the calendar year in which the beneficiary turns 15 years of age in order to be eligible to receive the grant: $2,000 or more has been contributed to an RESP (and not withdrawn for non-educational purposes), or $100 or more has been contributed to an RESP (and not withdrawn for non-educational purposes) in each of any four previous years."

PoutineLover

  • Pencil Stache
  • ****
  • Posts: 993
Re: Gifting RESP money to baby?
« Reply #9 on: November 27, 2018, 02:00:26 PM »
For lower income earners there's an added bonus to your gift. If you are kind enough to contibute $100/year for 4 years, the recipient (baby) can then self contribute if they want when they are older; after school job at age 16 perhaps. Its a plan for teenagers who save for their own schooling; if parents aren't going to save as well (no judgement here, not every parent can).

If your friend is low income the first $500 also qualifies for an additional 10% bonus.

"For 16- and 17-year-olds (calendar year in which they turn 17), one of the following conditions must have been met by the end of the calendar year in which the beneficiary turns 15 years of age in order to be eligible to receive the grant: $2,000 or more has been contributed to an RESP (and not withdrawn for non-educational purposes), or $100 or more has been contributed to an RESP (and not withdrawn for non-educational purposes) in each of any four previous years."
That's also really good to know. I gave $100 this time, not sure if I'll be able to do that annually but we'll see. I talked to my friend about her savings plan and she does plan on saving for the baby, plus I mentioned how my parents put tax credits and gifts in mine, and she said she'd like to do that too. I don't think they are low income, but depending on the threshold they might qualify. And QC gives a 10% bonus up to $250 too I think. I wish I could do an RESP for myself again lol, where else can you get a 30% return?!

Prairie Stash

  • Handlebar Stache
  • *****
  • Posts: 1603
Re: Gifting RESP money to baby?
« Reply #10 on: November 29, 2018, 08:49:26 AM »
That's also really good to know. I gave $100 this time, not sure if I'll be able to do that annually but we'll see. I talked to my friend about her savings plan and she does plan on saving for the baby, plus I mentioned how my parents put tax credits and gifts in mine, and she said she'd like to do that too. I don't think they are low income, but depending on the threshold they might qualify. And QC gives a 10% bonus up to $250 too I think. I wish I could do an RESP for myself again lol, where else can you get a 30% return?!
Me too. I was full student loans and started University at 17. Theoretically I could have dropped my loan into an RESP and pulled it out in January for second semester. With the catch up rules that would have been $5000 into the RESP and I would have had a bonus $1200 a mere four months later. Since I was working anyhow I could have done the same at age 16, for another $1200. Its a crazy scheme.

I was on the fence when I signed up for University, I almost didn't apply; eventually I did just to prove I would get in. My 16 year old self couldn't fathom paying so much, it was an impossible sum of money, so I had very little intention of following through with attending. What finally made my decision was receiving a $5000 bursary (scholarship for poor people), when I'm feeling thoughtful I sometimes wonder what would have become of me if I didn't get the bursary (I don't think I would have finished school, or even gone). No one can ever be certain of the path not taken, but we all have those moments where the roads diverged. The benevolence of strangers changed me forever, they'll be getting a card when I FIRE, I owe them the story of what became of me.

Thats the power of gifting money for school, I honestly believed that a random bursary was one of those critical moments in my life. It's also why I'm passionate about RESP's (to the point of preaching), not everyone is lucky enough for bursaries and scholarships.

PoutineLover

  • Pencil Stache
  • ****
  • Posts: 993
Re: Gifting RESP money to baby?
« Reply #11 on: November 29, 2018, 09:19:50 AM »
That's also really good to know. I gave $100 this time, not sure if I'll be able to do that annually but we'll see. I talked to my friend about her savings plan and she does plan on saving for the baby, plus I mentioned how my parents put tax credits and gifts in mine, and she said she'd like to do that too. I don't think they are low income, but depending on the threshold they might qualify. And QC gives a 10% bonus up to $250 too I think. I wish I could do an RESP for myself again lol, where else can you get a 30% return?!
Me too. I was full student loans and started University at 17. Theoretically I could have dropped my loan into an RESP and pulled it out in January for second semester. With the catch up rules that would have been $5000 into the RESP and I would have had a bonus $1200 a mere four months later. Since I was working anyhow I could have done the same at age 16, for another $1200. Its a crazy scheme.

I was on the fence when I signed up for University, I almost didn't apply; eventually I did just to prove I would get in. My 16 year old self couldn't fathom paying so much, it was an impossible sum of money, so I had very little intention of following through with attending. What finally made my decision was receiving a $5000 bursary (scholarship for poor people), when I'm feeling thoughtful I sometimes wonder what would have become of me if I didn't get the bursary (I don't think I would have finished school, or even gone). No one can ever be certain of the path not taken, but we all have those moments where the roads diverged. The benevolence of strangers changed me forever, they'll be getting a card when I FIRE, I owe them the story of what became of me.

Thats the power of gifting money for school, I honestly believed that a random bursary was one of those critical moments in my life. It's also why I'm passionate about RESP's (to the point of preaching), not everyone is lucky enough for bursaries and scholarships.
That's similar to my path, I paid my university through a combination of RESP saved for me, my own savings from working in high school, a work study job, student loans, grants (including the ones from the fact that loans were capped and everything above was forgiven), and bursaries. I am so grateful for the free money at the various programs, I would have been in so much more debt without it. University is already so expensive, I shudder to think what it'll be once this baby is old enough for it. I donate back to those programs now at my university, and I'd love to establish a bursary for low income students after I'm FI or when I die.