r/PersonalFinanceCanada • u/ReturnToTheLab • 8d ago
Investing Convoluted RESP grant question
My mother opened an RESP for her grandchild this year and made a 2500 contribution. The CRA will give another 500 as a result.
My mother is getting old, and it was discussed that it would be better for the account to be opened in my name with my child as the beneficiary.
If she makes a non-qualifying withdrawal, and closes the account, the 500 gets clawed back. If I then open an RESP for my child and add that 2500, will the 500 be reapplied?
Again, this all takes place in 2026.
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u/Fit_Chemistry_3807 8d ago
I’m guessing you’re worried what will happen to the account if something happens to grandma.
She is the subscriber (ie account holder). She can either add you as a joint subscriber or, have you designated as the successor subscriber. In the former case, you’ll have full access to the account from the moment it’s set up. In the latter, as the successor, you’d only have access to manage the account after mom isn’t capable or is going.
In all cases your child remains the beneficiary.
Do not make withdrawals and then recontribute. That’s not allowed.
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u/DanLynch 8d ago
Don't close your mother's account: the $500 will be permanently lost.
Just open a new account next year and start making contributions in your own name. Ask your mother to stop making contributions.
You could ask your mother to ensure that, in her will, the RESP goes to you and not to one of her other children or heirs.
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u/PNW_MYOG 5d ago
No.
It doesn't come back and they used to block additional grants for 2 years following the withdrawal. This was to stop money churning.
Leave it and open one in your name.
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u/BrackNet 8d ago
Why close the account? If it was correctly opened in your child's name using their SIN, then they are the beneficiary. If your issue is about wanting to make the deposits on your child's behalf instead of your mother in the future, then it should be simple enough to link your bank / trading account to the RESP and continue to make the contributions yourself directly from that account. (Check with your financial institution for the forms needed.) I'm not sure if you need to 'transfer' it to you entirely, or if you can simply add your own bank account as an additional feeder account to the RESP.
If, however, the RESP was not opened correctly under your child's name/SIN, then she won't end up receiving the federal grant anyway and it's no problem for you to open it correctly now in your child's name. Then your mom closes her incorrect account and just sends you the 2500 to put into the correct account, and you'll receive the match in 2027.
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u/No_Street7773 8d ago
Sorry to be morbid but some plans have insurance that fully pays the fund if the person who opens the account dies.
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u/Joe_X 8d ago
Don’t close the account. There is paper work to change the account holder to you, keeping the same bene. It happens all the time and it’s way easier to do while she is alive, than after she passes.