Background: We moved to the US in 2013. While in Canada, we didn't know about low-cost index investing so we sunk almost all of our money into our mortgage.
One exception was our Retired Educations Savings Plan. For those that don't know, these are for college savings. You put in $2500 (after tax money) and the government contributes an additional $500. It grows tax deferred, but the income upon withdrawal is for the student.
Our "investments" are with RBC (a big Canadian bank). I won't get into the products we have, but they suck. When filling out my FBAR this year, I see that from Jan 2016 - Jan 2017 we made about 1%. As non-residents, we can't purchase different Mutual Funds or ETFs. There are some bond type investments we can get, but they will also likely underperform.
If we withdraw the money from the RESP accounts, my understanding is that we have to:
1) Return the original government contributions (~17% of the principle).
2) Pay income tax on the gains (our marginal rate + 20%). As non-residents, I think that this means we'd pay 25% + 20%.
In our case, our initial investment was
Our investment: $10,000
Government Contribution: $2000
Gains: $3,500
So, if we withdrew now our $15,500 would become $11,925 ($10k + 55% * $3,500).
We'd convert this to USD with a money changer like interchange and get close to the actual exchange rate. Let's assume my $11,925 CDN becomes $8,852.
My girls are now 7 and 5. If I put this in a Vanguard total market index in a NYS 529 plan, I'd get 6.25% back on my taxes next year ($550).
If that happens, then when my youngest is 18 the investment in the 529 would be about $21,300 (assuming 7%/year with dividends reinvested).
Here are the values of our RESP given potential rates of return (in USD converted at today's rate ~ $0.74 CDN / $1 USD)
Return---$0.74 C/US---$1 C/US
1%--------$13,054-----$17,640
2%--------$14,837-----$20,050
3%--------$16,844-----$22,762
4%--------$19,098-----$25,808
5%--------$21,628-----$29,227
If the exchange rate stays the same we need to return over 5% on the Canadian investments to win leaving money in Canada.
If we got to parity again, we'd need between 2-3% to win leaving money in Canada.
My guess is that we'll get returns between 2-3%.
The side benefit of moving the money would be that we wouldn't need to fill out an FBAR form every year, but that's about 10 minutes worth of effort.
If you were in my shoes, what would you do?