Many folks think about this for their RRSP however what about for your child’s RDSP? Should I borrow to Max Out contributions?
As regular contributions to RDSP may not always be possible, the Government of Canada introduced legislation provisions allowing the “carry-forward” of Grant and Bond eligibility from prior years. These provisions allow Holders to apply for unused Grant and Bond eligibility from the past 10 years (for the moment, going back to 2008, the year that the RDSP became available)
The letter was actually quite well written, but the clincher was them including a table showing how much unused contribution room I had left, which was over $4000, however, if I put that much money in, the government will pay in grants over $6000 .
This begs a very interesting question: is it worth borrowing money to get to the Maximum contribution room (and thus get the maximum Grant)? Unlike RRSPs, this is not a tax break (i.e. it does not lower your net income), and the money put in we (my wife and I) never get to touch as it will be in my son’s name, however, putting $10K away in a savings vehicle for an 8 year old, might be a good way to ensure his future.
My guess is I will attempt to scrape together these funds, and borrow some money to get there, but I am curious to hear other folks opinions on this idea as well.
Yes, this flies in the face of my, Never borrow money ever rants that I have been on lately, however if you can get immediate over 100% pay back, shouldn’t you?
Given the grants paid are on the basis of my income until my son turns 19, I think borrowing is a bad idea (in hindsight). After he turns 19 I will revisit my plan for contributions to his RDSP, but for now, borrowing makes little sense.