As my regular readers know I have been spending a while attempting to figure out the new RESP Rules put in place for RESP withdrawals (I have two daughters attending University and wish to withdraw money from their RESPs).
I am dealing with TD Mutual Funds (so please keep this in mind, this is not a generic rant about RESPs in general, they may work well with other firms, I can only comment on what I am currently dealing with) for these RESPs. I think in the end this was a mistake on my part, I should have moved these funds over to a Self-Directed RESP offered by TD Waterhouse because:
- TD Mutual Funds are really an adjunct of TD the bank and have a lot of overhead dealing with them (as you will read).
- There are TD Index Funds that are not available (or are made as unavailable as possible) when you deal with TD Mutual Funds directly (the E-Series Index funds in specific, which are easily purchasable if you have a TD Waterhouse account (or in fact any normal trading account)). You must fill in forms to be able to trade those funds in your Mutual Funds account (more RESP Rules).
This is not what I am writing about today, I include this simply to be complete in my discussions.
As I have outlined in previous RESP posts in the past week or two:
- RESP Wrinkles new rules have appeared for withdrawls.
- RESP Money to Get Money these new rules have created another income stream for some Universities
- RESP Switcheroo however some schools have not taken advantage of this opportunity.
- RESP Redux however rules are not always well understood
- TD E-Series Bear Trap shows that TD has its own rules that can trip you up.
Where I stand now is that the Branch Manager was in fact mistaken, and the only way I can withdraw money from a TD Mutual Funds RESP is to make an appointment with someone at the Branch with a Mutual Fund License (?!?) and I can then complete my transaction (he does not know the RESP Rules).
So I end up where I started, which is I can only get at the funds if I go into my branch.
For those of you who have not read any of my diatribes about Free Banking, this is the kind of thing that makes me think that maybe I need to change banks again, or at least put together a plan on why I might do that, and then share it with the lucky person at the local branch who I must talk to about RESPs and withdrawals. I think that is what I might be doing, very soon.
Just a general comment: RESP’s are a more specialized investment than most banks realize – and I also speak from personal experience! It is possible to transfer funds from a bank/mutual fund RESP to a group RESP as long as you do this before the maturity date. Depending on how long your RESP has been in existence, the institution might charge for this transfer of course! In the long run however, this might still be worth it – group RESP companies do have a lot of expertise as well as some really decent returns, and might save you a lot of stress when you want to withdraw.
AAhhh…. sigh. The fine print. The endless mail outs. The “customer service” mantra. Yet, simple things can be so difficult. I won’t bore you with my story, but I have been going back and forth between different arms of the same institution trying to get my business done… and I’m beginning to wonder if they want my business or just assume it will be there. Oh well… thanks for sharing your story.
@Big Cajun – sounds like you’ve already made your decision (about switching banks)? If not, does Erin have a shot to change your mind?
Let us know what you decide and how the lucky branch Associate handles your needs.
I never said I was changing banks, did I ?
Sorry to hear about your experience. We’d like to help, so please email email@example.com (subject line: blog comment) so we can get in touch with you to find out more. Thanks for your feedback, and enjoyed reading the comments!
Erin from TD
Right on, thank you sir!
@BCM thanks for the tip. So, would I continue my monthly contributions inside my current RESP and then just make transfers to the e-series account?
Like I said, I can’t even click on the account in East Web to see latest transactions, interest earned, etc. I doubt that I’ll be able to easily transfer between accounts…
You could, just set up an automatic update using On Line tool and you should be fine. TD Waterhouse has no issues with CASH being dumped into an account and then purchasing the Index Fund once a quarter? Set up the Index Funds in DRiP mode and you are off to the races.
I opened up an RESP for my daughter just weeks after she was born. It’s held at TD along with all of my other accounts, including a TD Waterhouse account. In my rush to set this up I just kind of went along with what the advisor was telling me, and I ended up in some term deposit type account (I can’t even click on it inside of EasyWeb) because she said it would be the easiest way to collect the gov’t grants.
What I would really like to do is open up e-series funds for the RESP, but from everything I hear it’s a bit of a headache to set-up. Any advice for me?
Set up another RESP for your daughter, this time with TD Waterhouse, and buy the E-series in there. You can evidently get E-Series Index funds in the TD Mututal Funds (at least that is what the Canadian Capitalist claims), but you have to go completely on line (or something like that). I will be resolving my problems by opening a TD Waterhouse account for my remaining kids.
Wow. Just…wow. My head is spinning. On the plus side, there are probably at least 20 new jobs created by these rule changes :-p