Registered Education Savings Plans

Below is a link to a fantastic site for helping people to understand RESPs, the CLB, and the CESG.  When you click on the link, it will take you to my profile page - from there you can explore the rest of the site.

         Registered Education Savings Plans - Kuldip Sharma

Enjoy!

Who Can Subscribe to an RESP?

Except for family plans, generally, there are no restrictions on who can be the original subscriber under an RESP. You and your spouse or common-law partner can be joint subscribers under an RESP.

A public primary caregiver of a beneficiary under an RESP may also be an original subscriber.

If you are not the original subscriber, you can become a subscriber only in the following situations:

• you are a spouse or common-law partner, or ex-spouse or former common-lawpartner, of a subscriber and you get the subscriber's rights under the RESP as a result of a court order or written agreement for dividing property after a breakdown of the relationship;
• you are another individual or another public primary caregiver who has, under a written agreement, acquired a public primary caregiver's rights as a subscriber under the RESP;
• you acquired the subscriber's rights under the RESP, or you continue to make contributions into the RESP for the beneficiary, after the death of the subscriber under the RESP; or
• you are the deceased subscriber's estate that acquired the subscriber's rights under the RESP, or that continues to make contributions into the RESP for the beneficiary, after the death of a subscriber under the RESP.

All subscribers under an RESP have to provide their social insurance number (SIN) to the promoter before we can register the RESP.

Source: Canada Revenue Agency

RESP: are you receiving ALL your CLB and Grant Money?

Not every financial institution applies for the CLB and Additional Grants on your behalf.  For example, here is an excerpt from the TD Canada Trust website:

Source: tdcanadatrust.com

Notice how the bank will apply for the Additional CESG and CLB on your behalf if you enrol your child into the GIC RESP, but not if you are enrolled in their Mutual Fund RESP?  Having an RESP professional working on your behalf will ensure that you are receiving all your government entitlements.


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The Effect of the MER

Many of us are not aware of just how expensive some financial products really are over the long term.  The Management Expense Ratio (or MER) is an excellent example of how fees that are collected over the length of the investment, rather than upfront, can quickly add up.  Examine the chart below:

You make a lump sum investment of $10,000.  With an MER of 2.75%, over the next 20 years (assuming an average annual ROR of 10%), your fees will total almost $27,000.  Your overall return is almost 40% less with the introduction of a 2.75% MER.

Remember, an MER is a fee that is charged every year.  Always look at the TOTAL cost of the investment, not just the annual fee.  It can make a tremendous difference in your financial future.

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Thank-you to all of my clients, I greatly appreciate this wonderful honour!!