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RESP Lessons Learned

I wrote RESP Lessons Learned back in 2010 as I was figuring out how to withdraw from an RESP. It is not as daunting as I make it out to be, but you must be careful. You need to spread the taxable portion out. One way to do this is to use the taxable portion first when your child’s income should be lower.

I have learned a great deal about the inner workings of TD Mutual Funds and how the RESP program works. From these incidents, I have put together an RESP Lessons Learned for myself and for other folks who may be thinking about RESPs.

A lot of these points are my opinions on TD Mutual Funds. I am not happy with the process of dealing with this part of TD Canada Trust.

RESP Lessons Learned 1: RESPs Make Sense

Given the amount of money in the CESG and the Growth Portion of my daughters’ RESPs, I think putting money into RESPs for them was a good idea. I don’t want anyone to interpret my issues dealing with the Systems put in place by TD as me saying that RESPs are a mistake. They were a good idea for me, and I think they are a good idea if you are pretty sure your kids will go to University or College when they get older.

RESP Lessons Learned 2: TD Mutual Funds Were Not Where to Leave My Money

For those of you who are not aware, you can buy Mutual Funds at TD from the TD Mutual Funds portion of TD, or you can open a TD Waterhouse Trading account and buy any Mutual Fund, Index Fund, ETF, etc., that you want (TD Waterhouse may charge you fees on the accounts themselves, however). I don’t think (and this is my opinion) that the TD Mutual Funds service is of much use to me. It has a limited number of Funds (mostly only TD funds) with higher MERs, and you can’t access the E-series TD Index funds from there (which seems strange, given it is a TD product).

I had funds there because I opened these RESPs when I was a Canada Trust customer (and had less experience in investing). Then, when TD bought Canada Trust, the accounts swung over to the TD Mutual Fund Group. At that point, I should have moved the accounts to TD Waterhouse and been done with it, but I was lazy, and this is my fault.

I will be opening a TD Waterhouse RESP for my son in the next few weeks.

RESP Lessons Learned 3: Read about RESPs and Learn More

I am still learning about RESPs, and I have been talking about them for six years now, so learning as much as possible about any investment vehicle, while a motherhood statement, is essential. I misused terms (and most likely still do) when discussing the account’s Principal, Growth, and CESG portion.

RESP Lessons Learned 4: TD Needs to Automate The Redemption Process

The cashing in of the funds in the RESPs was painful. It is a paper-heavy process that should be automated. The argument that going into the Local Branch of my bank is needed to make sure no mistakes are made is just not good enough. It seemed more a “cover our backsides” exercise by TD to make sure folks aren’t fraudulently taking funds for kids who are not at Post Secondary institutions.  If I produce the Letter stating my kid is at an accredited institution (and FAX it to them or e-mail it), why must I sit with a “Mutual Fund Specialist” for an hour to finally get the money out?

How does TD Waterhouse do this? Do I need to find a TD Waterhouse office to cash in one of their RESPs?

Am I Done?

I hope my rants and comments have helped folks understand RESPs a little more and maybe taught a few lessons to folks who weren’t sure what to do with money for their kids’ future.

Hopefully, this is the last post about RESPs (this year) on this blog (but don’t bet on it).

Remember to read the Registered Education Savings Plan page for the overall view. The other posts about this particular attempt at extricating money include:

Feel Free to Comment

  1. I’m surprised at all of this blogging regarding difficulties with TD Waterhouse RESP Accounts. I opened a family account many years ago and have now put through 2 daughters and am about to finish putting my son through University. I download a form from TD’s website (Registered Education Savings Plan Withdrawal Request), fill it in and fax with my child’s proof of Universaity6 attendeance (which he send to me as a pdf) and within a week or so, the money arri8ves in his bank account, hassel free!

    I agree that its pointlerss gpoing to a TD branch. I went there only to deposit cash into my RRSP & RESP’s. Otherwise if you need info, I found that calling the TD WAterhouse 1-800 number and aski to speak to the RESP office (limited hours, though).
    I’m happy!!

  2. First off, glad to hear you’re opening a TD Waterhouse RESP for your son in the next few weeks. In terms of automating the process, we hear you. However, like other financial institutions, we have to adhere to HRSDC requirements, which means customers need to come into a branch or TD Waterhouse location with specific documentation so we can ensure we’re meeting those requirements.

    Good discussion on your blog, as always.

  3. I feel a lot of sympathy for you. I have my family RESP with TD and compared to other institutions I’ve dealt with they are definitely NOT my first choice (yes the reps are very nice and the branches have long hours, but they’re generally clueless about their own products).

    One thing I should mention though is you can access e-Series funds in an RESP! The process is complicated.

    1) open an RESP account at a branch
    2) make your initial contribution & purchase of funds
    3) go online and fill out the application to convert to an e-account
    4) once converted switch your initial funds to e-series funds
    5) update your automatic investment plan to direct to the e-series
    6) accept the fact you cannot direct CESG or other grant money directly into e-Series funds so probably money market is best and then switch it manually once or twice a year
    7) don’t bother visiting a branch for e-account questions, they’ll act like you’re at the wrong bank!
    8) don’t ask anyone at the bank RESP questions, they don’t know!

    When my kids go to university I’ll come-back and update this comment to let you know how easy/hard it is to withdraw money from an e-account!

  4. I know nothing about RESP’s, thank you for continuing to educate me. I also have no children as of yet 🙁 but when that changes I will be sure to do quite a lot more reading on the topic 🙂

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