RESP vs Savings

[rockscan]

Something I learned yesterday that may be beneficial to others.

If you have opened an RESP know two things: the EAP (gov grant) is taxable to the kid and the record of enrollment expires.

These are important if you have an unreasonable ex and/or put more money away than you need. If you withdraw $2000 of the EAP portion and only pay your ex $1000, the whole total is taxable to your kid. Or if you put away $40000 and only need $20000, you lose the opportunity for interest.

Definitely talk to a financial advisor. My partner will not need all the money he put away and has lost several years of interest opportunity by putting it in an RESP. He was looking for a tax shelter and to protect it for future need. Hindsight now tells him he should have saved it differently.

[dad2bandm]

...
If you have opened an RESP know two things: the EAP (gov grant) is taxable to the kid and the record of enrollment expires.

Generally, students are poor, and they get a lot of tax credits, so that is normally not a issue. They pay no tax, or little tax.

These are important if you have an unreasonable ex and/or put more money away than you need. If you withdraw $2000 of the EAP portion and only pay your ex $1000, the whole total is taxable to your kid. Or if you put away $40000 and only need $20000, you lose the opportunity for interest.

Definitely talk to a financial advisor. My partner will not need all the money he put away and has lost several years of interest opportunity by putting it in an RESP. He was looking for a tax shelter and to protect it for future need. Hindsight now tells him he should have saved it differently.

Check with a financial advisor who knows about RESPs. Does your partner have an RRSP? You can make AIP transfers or rollovers to an RRSP.

It's also best, to withdraw all the EAP money while the child is going to school (even if you don't need it), as then you can sock it away in other accounts (ex. TFSA).

[rockscan]

I expect that if he takes out the EAP money and its taxable to the kid, the ex will expect him to give the kid all of the money he takes out. The problem with THAT is he has to take the money out before the record of enrollment expires and he doesnt get receipts until the summer AFTER the record of enrollment expires. His financial advisor said she will make do for now by withdrawing it from the deposit amount.