Nelson, thanks for your quick response to my question regarding late filing of TD F 90-22.1 forms. Your suggestion was pretty well what I had concluded.
If a US citizen were to set up an RESP, apart from having to claim income on the holdings and pay US tax, is there also the requirement to report it as a trust? The various reporting requirements and penalties seem rather draconian for something as simple as an educational savings plan.
RESP reporting
Moderator: Mark T Serbinski CA CPA
Yes. RESPs meet all the criteria for needing to file 3520 (and 3520-A by the trustees).
In fact, so do RRSPs, as IRS determined a couple of years ago. However RRSPs are specifically absolved of 3520 requirements if -- and I might add ONLY if -- the US taxpayer files follow the requirements of RP 2002-23 (and Notice 2003-75) or its 'coming soon' descendant Form 8891.
Truly, the advantages of an RESP are slim at best. For a US citizen living in Canada, they are non-existent.
What I am not sure of though is if a non-US citizen (parent or grandparent) sets up the RESP for a USC child, at what point the USC becomes the owner or the beneficiary of said trust.
<i>nelsona non grata</i>
In fact, so do RRSPs, as IRS determined a couple of years ago. However RRSPs are specifically absolved of 3520 requirements if -- and I might add ONLY if -- the US taxpayer files follow the requirements of RP 2002-23 (and Notice 2003-75) or its 'coming soon' descendant Form 8891.
Truly, the advantages of an RESP are slim at best. For a US citizen living in Canada, they are non-existent.
What I am not sure of though is if a non-US citizen (parent or grandparent) sets up the RESP for a USC child, at what point the USC becomes the owner or the beneficiary of said trust.
<i>nelsona non grata</i>
To get away from RESP reporting requirements in the US, I had my parents open a family plan for my child and her cousins, and then collapsed the plan of which I was the subscriber into the new plan. This is perfectly legal and effective so long as you can trust your parents with the money. 
In the US, there are at least a couple of alternative for college savings. For our money, a 529 plan seems like a better deal than an RESP. Sure, there's no government grant component, but the rules on contributions and withdrawals are much more flexible, and some state plans have excellent rates of return.
In the US, there are at least a couple of alternative for college savings. For our money, a 529 plan seems like a better deal than an RESP. Sure, there's no government grant component, but the rules on contributions and withdrawals are much more flexible, and some state plans have excellent rates of return.
Exactly as I had suspected.
I might just interject that it is not clear form andied posts that he is living in US or that he is a US citizen, he may merely have a US-born child and is now living in Canada, in which case he could still keep the RESP.
As maggie sez, the 'owners' of the trust remain the parents or grandparents (i'll assumed that she has checked this out), and the child (the US person) is not a beneficiary until s/he takes some money.
At that point the child would have to file a 3520.
<i>nelsona non grata</i>
I might just interject that it is not clear form andied posts that he is living in US or that he is a US citizen, he may merely have a US-born child and is now living in Canada, in which case he could still keep the RESP.
As maggie sez, the 'owners' of the trust remain the parents or grandparents (i'll assumed that she has checked this out), and the child (the US person) is not a beneficiary until s/he takes some money.
At that point the child would have to file a 3520.
<i>nelsona non grata</i>
The Cdn govt. did not allow our RESP plan to accept any more payments beyond Dec. 2003, even though it had a year to go, and certainly didn't give their educational grant to my daughter's RESP plan for the year we moved. There would also be problems if the child did not go to a Canadian university. If you are living in the States, I would just forget about setting up an RESP.
Off topic for the original poster, but Pamela, are you saying you didn't get the CESG grant for contributions made in your move year? If you made the contributions before your move, it doesn't make sense that they wouldn't be grant-eligible. We moved mid-year and received CESG on contributions made before moving. Of course, we did not make any further contributions after moving. However, the trustee institution was fully apprised of our move, well before it even occurred, so don't think that we got CESG because our relocation was concealed. It certainly was not.