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Your Personal RESP Checklist Before Year-End

12/18/2014 11:49 EST | Updated 02/17/2015 05:59 EST
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It's hard to believe 2014 is almost over. While many parents are busy wrapping presents, trimming the tree and visiting family this December, it's important to remember to do an annual check-up on one of your most important investments: your child's Registered Education Savings Plan (RESP).

Although there aren't any annual deadlines for contributing to an RESP, the Canada Education Savings Grant (CESG) limits are based on the calendar year. As a result, it's important to know where you stand when it comes to your current contributions and your eligibility for government grants.

Here are some RESP tips to keep in mind as the end of the year approaches:

Make sure you're maximizing the CESG - Through the CESG, the government matches at least 20 per cent of the first $2,500 you contribute to your child's RESP annually, up to a maximum of $500 per year. Are you close to the $2,500 limit for 2014, or could you boost your savings with one more contribution?

Use any grant room you've carried forward -- If you put less than $2,500 into your child's RESP in any year, you are allowed to carry forward your unused CESG amounts and catch up one year at a time until the end of the year in which the child turns 17 (although a total CESG payment in one year cannot exceed $1,000). If you fell short of the maximum amount in 2013, make sure you're aware of how much extra room you have in the current calendar year and max it out if you're able to.

Don't forget about your long-term strategy -- Remember that the CESG is capped at $500 for each year, so you don't get more if you exceed $2,500 in annual contributions. You can, however, carry over any unused CESG contribution room for future use until the end of the year your child turns 17.

The maximum lifetime CESG per child is $7,200, so it's important to try to maximize the full amount over the life of your plan. If you started the RESP immediately after your child was born, you have lots of time to claim up to $500/year. However, if you started the RESP when your child was 10, you need to play a bit of catch up and plan your contributions accordingly.

If your child turns 15 this year, extra attention is needed -- In order to collect any CESG in the years your child turns 16 and 17, you need to have met certain conditions before the end of the year in which he or she turns 15. Specifically you need to have contributed $2,000 or made at least four $100 contributions in four different years into your child's RESP and not withdrawn any funds to maintain eligibility for the last two years' worth of CESG.

Know the ins and outs -- Many people forget that government grants can be received on contributions made up until December 31st of the year the child turns 17, even if they're already enrolled in university or college and are receiving their EAPs. You may also be eligible for the additional CESG or provincial grants, where available, so make sure you submit the necessary paperwork to your RESP provider.

For more information about CST Consultants, visit www.cst.org or visit us on Facebook, Twitter, LinkedIn, Google+ and YouTube.

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