Who knew that RESPs had so many rules! Mike Holman clearly explains all the ins and outs of RESPs in his book The RESP Book: The Complete Guide to Registered Education Savings Plans for Canadians. The book is only 118 pages long – the author tends to get to the point quickly.
Holman has graciously offered an extra copy of the book as a giveaway for my readers. To enter, just send an email to the contact email address in the upper right corner of my blog with the subject “Book”. Readers who subscribe to my feed will have to click through to my web site. Another benefit of going to my site when reading a post is to see the comments other readers leave on that post. All entries received before noon on Saturday, October 23 will be considered for the draw. I reserve the right to eliminate entries that I judge to be outside the spirit of the contest.
Holman covers the full range of RESP topics: contributions, grants, withdrawals, opening an account, and basic investing information. The author isn’t just a promoter, though; he also lists reasons why some people shouldn’t open RESPs.
One part of the book that struck me as amusing was the subsection titled “RESPs for adults are a waste of time.” What do you really think, Mike? This is as strong an opinion as the author expresses, though. Holman has opinions about which approaches are better than others, but they are expressed in a fair and balanced way.
Here are a couple of questions that came to mind while reading this book:
1. If two or more people open RESPs for the same child and they collectively go over the $50,000 lifetime contribution limit, which RESP gets hit with the 1% per month tax penalty?
2. RESP contents are divided into contributions and accumulated income. Accumulated income consists of government grant money and investment gains. When I start withdrawing RESP money for a child in university, my preference is to withdraw grant money first, then investment gains, and lastly contributions. The reason for this order is in case the child quits school, the grant money must be returned to the government and the investment gains will be taxed. When withdrawing accumulated income, can I request that it be entirely grant money at first, or is this restricted in some way?
In conclusion, I recommend this book to anyone planning to open an RESP. It is likely to be useful to those who already have RESPs as well.