I wrote RESP Lessons Learned back in 2010 as I was figuring out to withdraw from an RESP. It is not as daunting as I make it out, 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, TD Mutual Funds and about how the RESP program works. From these incidents, I have put together an RESP Lessons Learned for myself and for other folks that 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 construe the issues I had 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 are going to 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) that have 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), and then when TD bought Canada Trust, the accounts swung over the TD Mutual Fund Group. At that point, I should have moved the accounts to TD Waterhouse and be 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 still am 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 kept misusing terms (and most likely still do) when talking about 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? Must I 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).
The Saga’s Other Stories
The other posts about this particular attempt at extricating money include: