I learned a LOT about RESPs while having fun at a RBCs twitter party earlier this month. I thought I knew a lot about RESPs and was surprised at what I did not know. We all have the same questions and concerns, I am sure, so I will share the most asked questions -with answers!- from the party. But first here are some facts that may surprise you and will prove that every little bit helps.
Q. Can I start an RESP before my child is born?
A. You can’t open an RESP account until the child is born because of the SIN # requirement, but the sooner the better.
Q. Who pays the taxes when the RESP is withdrawn?
A. If the student is enrolled in post secondary education, they pay the tax.
Q. What if my child does not attend College or University? What happens to the RESP?
A. The plan can remain open for 36 years. Upon cancellation, you could transfer money to a sibling or rollover to your RRSP.
Q. Can a grandparent open an RESP for a grandchild?
A. Yes, it is possible for a grandparent to open an RESP for a grandchild, even if they are in a different province.
Q. Do you have to take it all out at once or can you withdraw as needed?
A. No, there is no maximum amount that can be withdrawn annually. You can take it out over time, it doesn’t have to be at once.
Enter the “Grow your RESP with RBC” contest through RBC for a chance to win 1 of 4 prizes of $500 towards your own RESP! The contest runs until October 05, 2015 @ 12:00 am (Canada/Eastern). Open to Canadians 18 years and over. Hurry up and enter… if you don’t enter you can’t win! Enter via this link—> http://bit.ly/CtResp
Interested to learn more about RBC RESPs from an expert? Make an appointment with an expert who can answer all your questions and help you realize how easy it is to set up an RESP.