RESP

Registered Education Savings Plan (RESP) accounts are used to fund education expenses. Their advantages include tax-free growth and include education grants (Educational Assistance Payment EAP) deposited by the government (for beneficiaries 17 and under). Contributions are not tax-deductible. Any funds withdrawn from EAP or growth of the account are added to the taxable income of the student beneficiaries (who likely have a low tax rate) but must be applied to educational expenses. Original contributions (Post-secondary education withdrawal, or PSE) are not taxed on withdrawal.

IMPORTANT:Please note that we only allow individual RESPs at this time. If you have a family plan, you will still need to itemize separate RESP accounts for each beneficiary. The title 'subscriber' refers to the person (or joint spouses) making the RESP contributions. RESP contributions are not tax deductible. When it comes to family RESP plans, the subscribers may be parents, grandparents, or siblings of children, including adopted children. When it comes to individual RESP plans, there are no restrictions regarding who can act as an original subscriber. Yourself and and your spouse (or common-law partner) may also be joint subscribers under a single RESP. However the subscriber must be a person, as opposed to a trust or a corporation..
If you specify the subscriber as 'Other', simulated contributions to the account can be only made through the automatic SAVINGS feature, with 'Other' entered as the contributor.
You may assign your kids, your spouse, or anyone else as the beneficiary.

Deposits can be made to the RESP for 31 years after the opening of the account, and they can add up to $50,000.
The TIME MACHINE will automatically add any applicable grants, up to to current limits (currently 20% of contribution from $500 up to $2500 per year for children 17 and under, up to a lifetime limit of $7,200 maximum). These limits are not indexed by the TIME MACHINE.

Note that we do not yet consider the Additional Canada Education Savings grant or the Canada Learning Bond, which allow low-income families to receive grants earlier.

You must specify your province, as some provinces allow additional grants (the TIME MACHINE will be able to implement these provincial grants in the future).

You will be able to specify the RESP from you wish to draw money when you enter your EXPENSES in 'Edit Expenses'. Setting an educational EXPENSE is the only way to set withdrawals from the RESP in the TIME MACHINE.

In the TIME MACHINE, withdrawals occur in the order of

  1. Grant money
  2. Growth of the account
  3. contributions.

Taxable withdrawals are added to the taxable income of the beneficiary.

The account closes after 35 years. If any balance remains, all contributions are refunded (if it was a joint account, the refunds are proportional to each spouse). Grants are returned to the government, and any growth is added to your RRSPs, if you have room for them (otherwise, they are added to your taxable income). Additionally, the penalty--of 20%, or 12% for residents of Quebec--is paid. These are the most common options for RESP withdrawals allowed by the government. Please contact us if you are seeking alternate options.

You can add investments to the account as you can any other account. You can indicate to the TIME MACHINE if you wish to open an RESP account in the future. Foor future accounts, we view any amount in the account today as a future deposit. Any investments into these accounts will thus be indexed, with inflation, to the opening date of the account. They will then grow at whichever growth rate that you set. This will allow you to plan the investments with an asset allocation, which can be considered when rebalancing in the TIME MACHINE. The account, and its investments, will otherwise be ignored by the TIME MACHINE until the planned account opening date.