Sharing A Younger Sibling’s RESP With An Older Sibling

by Mike Holman

Family RESP plans are very popular with families that have more than one child.  Family plans save on account fees, paperwork and the best benefit is that if one child doesn’t use their RESP money, it can be easily shared with a sibling.

Normally, you would share RESP money from the older child with the younger child in case the older child doesn’t use it.  However, it can work the other way as well – you can share the younger child’s RESP money with the older child who is attending post-secondary education.

Here is a scenario: You have two kids – one older, one younger and you didn’t start the RESP until later on. The older child has not reached the $7,200 lifetime grant limit. The older child is going to school, receiving payments from the RESP and is not eligible for any more RESP grants.

You can contribute to the younger child’s RESP and the older child can withdraw the money. 

If there is a big age gap – there will be plenty of years of contribution remaining for the younger child, so this strategy could even out the total contributions between the kids if you started late.  Or perhaps your older child is a Rhodes scholar and the younger child is the captain of the football team and is less likely to need an RESP. 

Whatever the scenario, sometimes it makes sense to give more money to one child over the other.

Example:

Sue has two kids with an age gap of five years. Because of a tight family budget, an RESP account wasn’t started until the older child was 15 and the younger child was 10.

Sue made maximum contributions for the older child of $5,000 per year and there was approximately $19,000 in the RESP for the older child when she started school.  Sue has also been making $5,000 contributions per year for the younger child and he now has $25,000.

The older child has run out of RESP money and Sue is wondering if she can use the younger child’s RESP money for the older child.  Part of her thinking is that the older child is doing very well at school and the younger child is ….not so sharp.

Normally if a teenager is doing poorly at school, the last thing you want to do is put more money into their RESP, but in this case – it’s a pretty good investment.

Because the older child is going to University, if Sue contributes to the younger child in the family RESP account, the money can flow directly to the older child who is in need of the money.

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