Funding Childrens Education

The Morriss have two children ages 7 and 8 and would like to support them pursuing secondary education one day. They have never started RESP contributions as money is tight for them, but they have managed to almost maximize their RRSPs. This year they received a $100,000 inheritance and are determined to use a good portion of the inheritance funds for their childrens education. They have $50,000 room in each of their TFSAs and have maximized their RRSPs.

Explain their options and what you would recommend to them to maximize the funds for their childrens education. Be clear and specific on what kind of accounts and investments they should be starting.

the solution is below, please explain each alternatives.

Possible alternatives: 1. Put $50,000 in each, get $1,000 grant each and tax sheltering, lose other $6,200grant

2. Put $5,000 in each and $45,000 in each parents TFSA and contribute max to RESPs for next 8years

$2,500 per year normal limit to get 20% contribution, up until child is age 17, but you can catch up one missed year at a time.

Max GESG per child is $7,200 a year 7,200/.2 = $36,000

Can double up if missed a year, therefore they have 8 missed years (0, 1, 2, 3, 4, 5, 6, 7)

7/8 8/9 9/10 10/11 11/12 12/13 13/14 14/16 Total

7 yr 5000 5000 5000 5000 5000 5000 5000 1000 36,000

8 yr 5000 5000 5000 5000 5000 5000 5000 1000 36,000