RESP Grandparent Trick

Ingtar17 · Post by **Ingtar17** » Thu Nov 06, 2008 5:13 pm

I am US/Can dual citizen. Everyone else is CAN only.

I know I can get my wife's parents to set up an RESP such that I won't be taxed on it (ie. Canadian grandparents and Canadian grandson have nothing to do with the US). Will this work with my own Canadian parents who are US snowbirds 5 months of the year? Will this work if I set it up with my wife and file separately?

Thanks.

nelsona · Post by **nelsona** » Fri Nov 07, 2008 6:35 am

Even if the child were planning to move to US, your "trick" (which has been a suggestion on this site for many years, btw) is quite feasible. As long as the child is a Cdn resident when the plan is "set up".

Were they travel is unimportant. They are not US residents.

It would mean filinf MFS for you though.

nelsona · Post by **nelsona** » Fri Nov 07, 2008 6:37 am

The MFS comment would be if your wife funds the RESP. If the grans do it, there is nothing special for you to file.

Ingtar17 · Post by **Ingtar17** » Fri Nov 07, 2008 8:11 am

Sorry, I wasn't trying to imply it was MY 'trick'. Indeed, I learned about it on this site. I was trying to make sure that it didn't matter which grandparents did it. Sounds like it can be either.

If my wife set it up and we moved to the States then she'd have to start paying taxes on the RESP at that point, so having her do it might not be a good idea.

nelsona · Post by **nelsona** » Fri Nov 07, 2008 9:34 am

Exactly. This is best done by a grandparent.

Even if you don't move, at some point you may want to file jointly, even if it is simply to get principal residence sale tax-free or some other provision available to MFJ (who knows?).

Ingtar17 · Post by **Ingtar17** » Thu Dec 11, 2008 5:05 pm

I tried to transfer the balance of my Canadian son's RESP to my Canadian parents, but the person at the bank said that you can't transfer from my wife and I to them. They said I can only transfer to another RESP account in our name. They said that my parents could start a new one, but the current funds are stuck in my wife and I's name.

Is this true?

nelsona · Post by **nelsona** » Thu Dec 11, 2008 8:26 pm

That is correct.

the grands have to start their own RESP. That was clear from your first post. They need to set up an RESP.

Ingtar17 · Post by **Ingtar17** » Thu Dec 11, 2008 11:20 pm

Right - They have to set it up. But I thought I could transfer the funds from mine to thiers since it is the same beneficiary.

nelsona · Post by **nelsona** » Fri Dec 12, 2008 6:04 am

Nope. No provision for that.

Ingtar17 · Post by **Ingtar17** » Fri Dec 12, 2008 8:46 am

JohnSt · Post by **JohnSt** » Fri Dec 12, 2008 9:45 am

Not sure if this will help you at all (and only if you use MFS), but you can transfer to your Canadian wife (that is, take your name off of it). I did this with TD. That asked me to write a note saying "why" for their records. I did, saying I was a US citizen and that RESPs are taxable to US citizens.

nelsona · Post by **nelsona** » Fri Dec 12, 2008 10:03 am

Good suggestion. in other words, having your name removed form your current one.

Ingtar17 · Post by **Ingtar17** » Fri Dec 12, 2008 1:36 pm

I called the Registered Plans department at the CRA. It appears that you CAN transfer from one subscriber to another as long as the beneficiary does not change. See the below FAQ link to the CRA RESP site. Specifically the fourth bullet point in the Transfers section and item 8d. Removing your name only works if your wife never moves to the States.

[url]http://www.cra-arc.gc.ca/tx/rgstrd/resp ... #transfers[/url]

nelsona · Post by **nelsona** » Fri Dec 12, 2008 2:23 pm

Good work.

nelsona · Post by **nelsona** » Fri Dec 12, 2008 2:23 pm

Just a reminder that all such plans have to be started while the child is IN CANADA.